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One, Two or Three: How Many Credit Cards Should You Have?

By Philip Tirone

There is great debate over the number of credit cards a person needs for the best possible credit score. Some say one. Others say two. Then there are those who say three. Who’s right?

A question I frequently get is: “How many credit cards should I have if I want to earn the best possible credit score? I receive a lot of credit card offers in the mail. Should I apply for them?”

My standard answer is, “Between three and five.” To get the best possible credit score, you need to have the right number of credit cards. Why? Because the number of credit cards you have is a big part of your credit score. If possible, avoid retail store credit cards since it restricts where you shop. The best credit cards to have are revolving credit card accounts. These include Visa, American Express, MasterCard, or Discover.

If your credit score is 720+ and you have an excellent credit history, one or two credit cards may be all you need. However, if you’re rebuilding your credit, one of the biggest factors in determining your credit score is the number of credit cards you have. Why? Because the credit-scoring bureaus will not have enough information to assess your ability to pay credit card debt. If they cannot judge your payment history or do not feel comfortable that you are able to pay your bills on time and in full, they will not give you a high credit score. Their only option is to lower your credit score.

You may decide to pay cash and avoid credit cards. That’s not a wise decision because no credit is just as bad as poor credit. If the credit-scoring bureaus do not have enough information about your payment history, they give you a lower credit score. Their goal is to maintain a healthy credit economy and the best way to do that is to increase the credit scores of those with a good payment history.

On the other hand, if you have too many credit cards, the bureaus worry that you might be overextended. People with more than five credit cards may be tempted to accumulate a great amount of debt, especially during financial difficulties. The credit-scoring bureaus respond to this threat by lowering your credit score.

Having three to five credit cards is the best answer. This is the ideal number of credit cards for credit bureaus to evaluate your credit card payment history and it also shows your ability to manage the cards and debt you have.

If you do not have three credit cards, seriously consider getting at least three!

Here are credit cards for people whose scores are below 550.

Here are credit card offers for people whose credit scores fall between 550 and 719.

And here are offers for people with credit scores above 719.

If you have more than five, do not close the extra accounts! Doing so will not help your score as it might lower the average age of credit cards. Instead, stop opening new accounts and be sure to keep the proper credit card balances so you can show the credit-scoring bureaus that you are responsible with all your credit cards.

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