Multiple Credit Cards: More Than One Card for Better Credit Score

Although having more than one credit card is regularly associated with complex household finances, many consumers are starting to realise the potential benefits of having multiple credit cards. The Center for Media Research revealed that 51 percent of American citizens currently have more than one card. Despite the fact that there is a risk of too much debt, proper credit card management could actually save money. A better credit score leads to a reduced cost of borrowing on other financial products.

Why Do Consumers Want More Than One Card?

Although many people have a second card as a financial safety net or to accumulate credit card rewards, there is a potentially more important reason. It is widely recognised that paying for goods and services with credit and settling the full balance leads to a better credit score. All that remains is to establish the optimal strategy for getting a higher credit rating as quickly as possible. It is vital to maintain a timely repayment schedule as settling a bill outside the grace period is very damaging.

How to Achieve a Better Credit Score

Maxing-out a credit card will cause a score to fall, regardless of whether the balance is fully settled. According to Liz Pulliam Weston of MSN Money, maxing-out a card causes a 680 score to fall by 10 to 30 points. A score of 780 would drop by as much as 25 to 45 points. A far more prudent strategy is to use less than 30 percent of the available limit on multiple credit cards. Having a low percentage of debt in relation to the allocated credit limit will result in some credit history repair. The most effective results take place when less than 10 percent of the overall credit limit is used.

Multiple Credit Cards Lead to an Improved Credit Rating

Although it is difficult to define how many cards a consumer should have, there is little doubt that using several cards regularly leads to a better credit score. Emily Davidon of Credit.com stated: “They (lenders) value having a lot of established, old credit cards on your account. Having a lot of activity and responsible behavior reported to the bureaus is good for your credit score.” The answer appears to be to use a small percentage of the overall credit limit each month and settle the balance in-full at month end.

Pros and Cons of More Than One Credit Card

The two main issues with using multiple credit cards is that each one needs to be settled separately and there is an increased desire to spend money. The main danger is accruing further revolving debt due to a series of impulse purchases. However, well organised and disciplined people not only have the opportunity to enjoy gas credit card rewards, they can also achieve a better credit score in a fraction of the time.