How Do Multiple Credit Cards Affect Your Credit Score?


The recent shift from corporate to retail lending has opened the gateway to consumerism, riding on the back of credit. According to the RBI, one of the reasons for the quick uptick in credit card usage can be attributed to the increasing number of tie-ups between banks and fintech companies, making credit cards an accessible and convenient pay-later option for the Indian population. However, holding multiple credit cards can affect your credit score depending on how you manage them.

Here are a few factors that you may want to consider if you hold multiple cards:

1. Multiple Payments: Having multiple cards means tracking and managing multiple payments. A single missed payment can negatively impact your credit score. Staying organized is the key to consistent, timely payments.

2. Credit Utilization: Holding multiple credit cards increases the total credit available. Staying within your credit limits and balancing the utilization of each card is essential to maintaining a healthy credit score. It is advisable to keep the credit utilization under 30% of the total credit limit.

3.The Age of Your Credit Card: The age of your credit card is a significant factor. Acquiring new cards can decrease the average age of your credit history and potentially lower your credit score. Therefore, consider the impact of new cards on your creditworthiness. Opening multiple cards or having multiple new inquiries: Consider your financial goals and assess the need for a card before applying for it.

4. Types of Credit: While having multiple credit cards can boost your overall credit availability, credit scoring models give weightage to a portfolio that is diverse and includes a variety of credit types. When applying for loans, showcasing a variety of credit types positively influences your credit score.

In Conclusion, if you plan to acquire more than one credit card, you need to be ready for responsible credit management. Prioritize timely payments according to their due dates, keep track of your credit card accounts, and monitor statements to be able to take corrective actions before your credit score is impacted. Consider the impact of new or additional credit cards on your overall financial strategy. Aim for a diverse credit portfolio by adding various types of credit. Managing your credit responsibly will help ensure that your credit score remains healthy with multiple credit cards.

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