So How Many Credit Cards Can You Have and Still Get a Good Credit Score?

Yesterday, GolbGuru had a nice post on the number of credit cards you have and your FICO score. While I generally agree that too many hard inquiries (voluntary inquiries) in a short period of time (however if the inquiries span only a couple of days, they will be reported as one inquiry rather than multiple one) hurt your credit score in the short term (FICO only uses the hard inquiries in the past twelve months to calculate the credit score), I don’t think there is direct relation between the number of cards you have and your credit score.

To illustrate my point, let me first tell you how many credit cards I have (and don’t be surprised). As of today, I have 3 American Express (TrueSaving, Optima, CashRebate), 3 Discover (Regular, Platinum, Mile), 4 Chase (Perfect, Reward, Sony, Amazon), 2 Citi (Upromise, Dividend), 3 Bank of America/MBNA (PowerReward, AAA, Fidelity 529), plus several store cards (Loew’s, CompUsa, Macy’s, JCPenny) that I almost never used since I opened the accounts. Add them up, the total number of cards I have is 19. That’s a large number for just me. And what’s my FICO score?

The last time I checked my score was back in June after I attempted to get a Citi Professional card only for the 10,000 ThankYou points and one year 0% balance transfer (I probably should have waited till I pay off the balances to apply for the new card as the application was rejected, citing high balance). At that time, my score was 699.

The score was by no means great, but there were a couple of factors contributed to the low score. The credit report listed the following positive factors:

Yes, while I was accumulating credit cards in the past nine years, I was never late for any payment. On the other side, I had the following negative factors:

The first negative item, which I believe is the more serious one between the two, is the high balances on my cards. Back in June, I had three 0% BT from Chase and one from BoA with a total amount of nearly $51,000 and the combined credit limit of all cards was nearly $175,000. With other charges on the cards, the ratio of balances to credit limits was close to 31%, higher than 25% of utilization, a threshold that’s recommended for a good credit score. However, when I used FICO’s credit simulator and told it I will pay off all the balance in 12 months, my score jumped to between 750 and 770!

So what does this tell me? For my case, the score really doesn’t have too much to do with the 19 cards I have. My relatively good credit is the result of on-time full payments for every card I used. Though I have collected nearly 20 cards, I use only 6 of them regularly. To help me manage the cards so I won’t miss any payment, I use two simple steps (GolbGuru also some efficient ways):

1. Call the credit companies to arrange the payment deadlines to be within the first 10 days of the month;
2. Since I totally abandoned paper statements, I setup an alert on the first day of the month with Yahoo Calendar to remind me to pay the cards; then another alert the next day, one more two days later to check if the payments have been posted.

Do I worry about my credit score? Not really, since I won’t shop for credit any time soon. Actually, I plan to get the Citi Professional card that I was denied for when I pay off my current balance transfers (I still have three of them) to get the free loans (why not?) If I don’t want to keep the card, I can simply close it once the 0% offer expires. And because of the short history of the new card, closing it won’t have any noticeable impact on the length of my credit history and, therefore, my credit score.

The conclusion: As long as I manage my credit cards responsibly, the number of cards doesn’t really concern me.

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