I’m in the fortunate position that I’m able to pay my credit cards off at the end of every month.
My credit score is classified as “excellent” according to credit karma. Yet I still have room to grow.
This is what gets me though. Credit Karma Will give you suggestions on how to improve your credit score.
And the two suggestions they give me is to take out a loan (that I get) or GET MORE CREDIT CARDS!!
Seriously? Why? I don’t even use one of the three I already have.
Two is better than one, in case something goes wrong with one and you need a backup. But I’ve never had, or felt any need for, more than two.
2, one for use and other for backup.
(or as a friend of mine used to say, one to pay the other and the other to pay the first)
Because those recommendations are just ads for the credit cards they’re pushing.
ETA: Also I have spectacular credit and have three cards. Originally, Amex and Chase, then an Amazon (Chase) card later. One would be fine, but I like having at least two in case there’s a problem with one. Also, should I ever need it, I have about $50k in available credit across those three cards.
You don’t need any credit cards you can always pay for everything using cash or debit cards
I find it most convenient to have 1 credit card I have a debit card which I can use as a back up.
How many credit cards should you have to maximise your credit score is another question which I do not know the answer to.
I too have excellent credit. And a pile of credit cards.
ISTM all those credit advice apps are designed to give decent answers to folks with middling credit, middling debt, and middling income. Likewise the actual bureaus and scores themselves. OTOH, if you’re an outlier in any or all of those three aspects, their advice is comically obviously the result of a one-size-fits-all app being applied to a corner case.
Here’s a funny story:
Last year I moved into a new residence and bought all new furniture and housewares end to end. Spent quite a chunk of money in just a few days. Each of the TV/electronics store, the furniture store, the mattress store, and a glitzy housewares store all offered come-on deals where I could open their store credit card, charge my purchases, and pay only the minimum each month with zero interest. As long as I made the balloon payment after 1, 2, or 3 years depending on which card it was. If so, I’ll have gotten a 1-, 2-, or 3-year interest free loan of all that money.
BUT … [cue ominous music] If I failed to make the balloon payment timely, then 20% or 30% interest would be retroactively tacked onto the balance from the purchase date forward. And then I’d owe my soul to the company store. Nice trap they set for the unwary and the unlucky. Not one I’m going to fall into.
Anyhow, I open 4 cards in the space of about 3 weeks. And charge the furniture card up to the hilt because they would not approve a card for the total size purchase I was making. So I put as much as I could on their “zero interest for two years” card and the rest on one of my existing I-pay-in-full-every-month cards.
Now comes the kicker, and why this story is sorta-applicable to your situation …
Opening & using these 4 cards cratered my credit rating. 820 turned into 720 overnight. Why? The app said it was because of 4 hard credit report pulls in 3 weeks. Plus now I had a single card with a high balance to credit limit ratio AKA credit utilization rate. Unlike all my other cards with zero ongoing balance. Idjits!1!.
Fast forward a year to now, and my credit score has fully recovered even though I’ve paid but a pittance on any of those 4 cards. Next month I’ll need to pay the balloon on the one card with the 1-year-same-as-cash deal; the others will mature next year or the year after.
But the credit score reporting app still sees those 4 hard credit pulls within the last 2 years (WTF?) as a negative. But they can’t be adding much negativity to my score when it’s 820. And now they’re not worried about the high utilization on the furniture card. Which is still at ~95% of the limit; even with no interest expense, the minimum payment is eating that elephant with a teaspoon. WTF2
Go figure? Like I said, one-size-fits-all doesn’t.
My bottom line on this story for you:
If you do decide to open a card for some reason, don’t do more than one, and don’t put a big balance on it. Use it and pay it off for a couple months and see what that does to your score, and if the results are positive enough to matter to you, do another one WAG 6 months later. I actually expect you’ll see a short term dip in your rating but it may recover after a few months to higher than it was.
Separate to all the above …
“Room to grow” what? A better score? A greater total amount of potential credit? For why?
I do know that when I bought a car a few months ago being 800+ saved 1/4% APR over being 799-. It was a bit of squeaker versus my recovery after the 720 flail, but it had broken above 800 by then. Though strictly by luck, not skill or effort on my part. I suspect the car loan also had other, even higher, interest rate tiers for people significantly below 799, but I never got those details.
Beyond that, I’m not sure what utility a higher score has. We’ve just seen that high scores are short-term brittle, but can recover if you stay on top of it.
As to how many cards, I’ll start by backing the conventional wisdom upthread of one and a spare bare minimum.
I go beyond that and have one from a gasoline company that gets me ~5% off on their gas. And which I use only at the gas station so if it gets skimmed all the rest of my autopay and stored cards at bunches of websites don’t need to be updated; the only damage will be waiting a week to get a new gas company card.
I also have a couple of store credit cards for places I shop regularly where the card carries a ~5% discount.
But really two+gasoline is what I’d call both the minimum for safety and a reasonable maximum unless you’ve got particular reasons to have more.
Your credit score is based on a number of things, including whether you pay your bills on time, your credit utilization (how much of your available credit are you using), and how long your credit history is. If you were to get another card without changing your spending habits at all, it probably would increase your credit score, because your credit utilization would go down. That is, you would have more available credit, so your current debt would be smaller as a percentage of your available credit. But if your score is already excellent, that’s a somewhat nebulous goal.
I echo LSLGuy in wondering what “room to grow” means in this context? Could your credit score be higher? Probably, considering that almost no one has a “perfect” score. But there’s limited value in trying to improve a score that’s already “excellent.”
You don’t have to search YouTube very far to find people playing “the credit card game.” Having lots of credit cards, and frequently applying for new ones so they can take advantage of the various welcome offers in order to accumulate points, which they can then trade in for things like cash back or free travel. Seems like a mug’s game to me. Just use one to pay for your purchases, pay it off in full every month, and keep a second one in case of emergencies. That’s really all you need.
I have cash, a debit card, and a credit card. I also have a spare $100 bill hidden in the wallet (away from the regular cash) in case I’m in an emergency.
I did run into a situation once where I had to buy gas in the middle of nowhere. They didn’t take credit or debit cards (I think their machine was broken), only cash. Had I not had cash in my wallet I would’ve been screwed. Ever since then I’ve always kept the extra cash hidden in the wallet.
My credit score is close to 800 but I barely qualify for credit cards because I don’t have any credit history. I’ve always paid for everything with cash (including used cars) so credit card companies see me as a bad risk since I do not have an established credit history. It sucks. I had trouble getting the one credit card I do have (I had to get a special credit card for people with a lack of a credit history to get the one card I do have), and I have that set to auto pay at the end of the month. The only reason I even got a credit card is because the fraud protections are stronger vs a debit card, and because it’ll help me build my credit.
Yeah. It’s a mistake to get more than a year into adulthood without starting to build some credit somehow. Sometimes that’s impossible for some unlucky folks, but for the rest of us, it’s a near necessity.
Given the reality that you can get a credit card with no fees and pay it off every month, building credit does not mean wasting money on interest. It just means using the system to your advantage.
Agree. We (me and my wife) like to keep one for everyday purchases and use the second just for online purchases so that any odd uses immediately stand out.
Admittedly, it’s hard to limit them in these days. Both the AAA and our credit union automatically issue credit cards as part of membership.
A higher credit score does sometimes make a difference. Several years ago we splurged on our first ever nice car, a hybrid Lexus. The credit manager went into the back room to check on us. When he came out he asked, do you want to buy two? Things went very smoothly after that.
I have two majors and a bank debit card. That has served me well for a long time. Don’t see how I would need more.
How many CC you need will depend on what your goals are. There are ways to use CC to raise your credit score, having more than one can protect yourself in case one gets frozen, you can use multiple CC to gain Sign Up Bonuses to built miles points for travel. All uses are valid depending on what you want to do.
A situation I’d run into in the past is I’d apply for credit cards and get denied. Even when I got an envelope in the mail saying I was pre-approved for credit card XYZ, when I’d apply I got denied.
I’ve always rented, I buy used cars with cash and used my debit card to pay for everything. I paid off my student loans within 3 years of graduating college. I never needed credit. But when I wanted to start building credit, companies didn’t want to give me a credit card.
The only card I can currently qualify for has a $1300/month limit and I pay it off in full each month. Despite the fact that I have an above average net worth, pay the card off in full each month, have a good income and have a high credit score, this is all I can qualify for. I wish I’d gotten a credit card 20 years ago. But like I mentioned, in the past when I’d apply, I got turned down.
I have one personal credit card. I use it for regular expenses like groceries mostly and pay it off a couple times a month. I once loaded up a couple credit cards to bridge a financially difficult time. Never again. One is enough, I do not see why I would need a back up, debit works for most transactions here in Canada.
I have a business credit card in my name and also a store card for one of our suppliers in my name for the business.
Yeah I don’t see the motivation to increase my credit score anymore than it already is (797).
I don’t see a finance company turning down anybody with a score of 750 or higher.
I have more cards for Reasons, but 2 credit cards and a debit card are my minimum because when one of my cards is compromised, it’s a PITA if I’m traveling.
Being able to get and keep a card requires a certain amount of apparently financial security. You don’t have to use them anymore than they will tolerate you not using them. I’ve found that when retail companies move their credit cards from one bank to another, the new bank wants to squeeze more cash from them and will therefore try to increase interest rates and cause other havoc to get people to drop their cards. This is an issue in that your credit rating also includes how OLD your oldest lines of credit are and so things like very old gas cards or very old store accounts that you would like to hold onto are a problem if they start to play havoc with your rates. But if you’ve not been paying on time, they will definitely leave those rates up longer to try to get rid of you. I have had companies threaten to cancel my card “for non-use” but pushing back about contacting their regulators about this behavior will usually back them off it.
I don’t either. IMO they will say “yes” to your loan request if otherwise reasonable & ordinary.
But I will reiterate that the interest rate you pay for a loan may depend on your credit score. No way to know in advance what your particular lender will use as their score cutoffs for each APR rate bucket. So in that sense, and only that sense, you might see some benefit from a higher score than you have now.
I don’t actively monitor my score, but a couple of my credit cards have started including that info every month. IME it often moves randomly up or down 10-15 points. A decline this month is offset by a rise next month & vice versa. it just wanders a little bit around a central value.
I have two. This came in handy when the bank called to tell me there had been a questionable transaction on one of them. After I agreed with them, they cancelled the card and, until I got the replacement, I used the other one. Had it happened during the postal strike, it could have been several months.
I have 4 right now and I think I’m going to close one. I just don’t need it. Maybe two.
My oldest card from 1998. It has a “low” APR like 13% so I keep it in case I need to make a big purchase that I can’t pay off right away, with no other options. Last time I used it was for dog surgery.
My Amazon Prime Visa, which gave me 5% back on Amazon purchases. I’ve quit Prime so I only get 3% back on purchases. I also don’t hardly use Amazon anymore so I might cancel this one. It’s been my primary card for years so I need to shift some subscription payments before I close it. But I also like it because it allows me to do “micro loans” aka “Pay Back Later” on specific purchases for very low interest. This might incentivize me to keep it open.
My Citibank card. Got this just for the generous transfer terms and rate (1% for 2 years I think it was). I used this to help get my company (that I co-own) out of debt. That’s all paid off. Gonna close it.
My new AAA Visa card. 5% cash back on grocery stores and 3% cash back on Costco! I spend most of my money at the grocery store. I love this card (although the website sucks)! I am slowly making this my primary card.
Having different cards for different reasons is good. Having really old credit is good. Knowing which cards give you the most money back for each purchase is good.
Having just one credit card is totally fine too.