Why Having Too Many Credit Cards Can Hurt Your Credit Score
Contributed by Kristy George
How many credit cards are too many?
Different type of credit cards effect your credit report score differently. While having several department store credit cards may look bad, having several major credit cards may actually help your credit score. Of course this all depends on different factors such as the balance on your cards and the length of time you've had the cards. You have to pick the optimal time to close accounts to help your credit score as well.
When to close my credit card accounts
The absolute best time to close a credit card account is when the balance is 0 and you no longer want the account. It could hurt your score by closing accounts with balances on them. The reason is that the credit score formula looks at the difference between the amount of credit you've been granted and the amount you're actually using. Suddenly closing a bunch of credit lines can make the balances you carry seem larger and effect your score.
You also do not want to close accounts that are in good standing that you have had a long time because much of your credit is extended on a basis of how long you have had credit. Close the accounts you know you will not use because lenders look at them as a risk. They know at anytime, as long as the account is open, that there is the possibility you could charge on them up to your credit limit. By eliminating that option it will look better on your credit.
How is my credit score determined?
Your credit score is determined by information such as how long you have had credit, the total credit available to you, how much of that credit you use and whether you've had trouble making payments, among other factors. If your total credit limit is high and your balances small, that could help your credit score. Department store credit cards are easier to obtain than major name credit cards and thus will effect your score.
