Credit Cards - What Is the "Magic" Number? By Michelle Black

Have you been thumbing through your stack of credit cards lately and wondered, "do I have too many?"  This is one of the most common credit questions I receive, so I thought I would share a little bit of insight into the matter.

The answer to the "how many credit cards should I have?" question is not necessarily the same for every person. As a general rule of thumb, it is advisable to have 3-6 open credit cards on your credit report. So, I can very easily advise that if you have less than 3 credit cards, you need more.  That being said, if you have more than 6 credit cards open right now I am NOT advising that you immediately close any accounts.  It is very important to have some professional guidance when and if you decide to close existing credit card accounts.  Closing the wrong account can potentially cause your scores to drop significantly.

If you already have 3 or more open credit card accounts is much more important to focus on your credit card balances rather than the actual number of credit card accounts you have.  Did you know that if you have a credit card with a balance that is over 50% of your credit limit then your credit scores will be lowered even if you are paying your bill on time every month?!?! This means that if you have a credit card with a $500 limit and you charge more than $250 on the card then your credit scores are affected negatively.  Your best bet is to keep all of your credit cards paid off to a zero balance.  (HOPE members have access to our "Snow Ball Effect" debt pay off plan to help begin eliminating credit card balances during their membership.)  By keeping your credit card balances at zero you also get to avoid paying those pesky interest fees and, therefore, save yourself some money!

Another fact about your credit card accounts that you should be aware of is how extremely important it is to make sure that your credit card is paid on time every single month.  Since 35% of our credit score is determined by our payment history it is easy to see how one single late payment can cause a huge drop in our scores.  In fact, I have seen a credit score drop as much as 100 points due to a single late payment on a credit card account!  Keeping your credit card balances at zero gives you further insurance against late payments as well.

We at HOPE would like to thank those of you who participated in our Facebook credit poll last week which asked the question "How many credit cards should I have open?" If you are not already a fan of our HOPE Facebook page we want to invite you to follow us on Facebook and/or Twitter for access to HOPE's latest credit tips, special offers, and giveaways! Congratulations to Jill Lowe who won our credit poll contest last week and will be receiving a free professional credit analysis with a HOPE credit specialist!

If you have questions or need credit related advice, please feel free to give us a call at 704-499-9696.  Our friendly staff is waiting to hear from you and will be happy to help.