Does Opening Multiple Credit Cards Hurt Your Credit Score?

Yes, getting more than one credit card can affect your credit score. Whether it hurts or helps depends on how you handle the cards. Extra credit cards can help your credit score if you use them wisely. However, if not used wisely, they can lower your score. There are many things that can happen to your credit score and report when you get more credit cards.

How Credit Scores Work

To begin, it is helpful to know what makes up your credit score. The FICO and VantageScore scores, which both range from 300 to 850, are the most common ones. Several factors determine your score, but the main components are:

• Payment history – Whether you pay your bills on time. As a result, this is the most significant factor that contributes to your FICO score.

• Credit utilization is the amount of your available credit that you are actually using. This accounts for 30% of your FICO score.

• Length of credit history – How long you’ve had credit accounts open This is 15% of your FICO score

• Credit mix – The variety of credit types you have, such as credit cards, installment loans, mortgages, etc. This is 10% of your FICO score.

• New credit – How many new accounts you’ve opened recently and how many credit inquiries you have. This is 10% of your FICO score.

Opening Multiple Credit Cards Can Help Your Credit Score If…

Opening several credit cards is not necessarily bad for your credit. In fact, it can help in a few key ways:

• Increases total available credit – When you open a new card, you get a new credit limit, which raises your total credit. This helps lower your credit utilization ratio as long as your spending stays the same.

• Builds credit mix – Having different types of credit – installment loans, mortgages, credit cards, etc. – demonstrates you can manage diverse accounts responsibly.

• Lengthens credit history – Keeping old credit card accounts open maintains your length of credit history. Longer histories improve your score.

• Earns sign-up bonuses – Many cards offer generous signup bonuses of cash back, points or miles for spending a certain amount in the first few months. Earning these bonuses allows you to maximize rewards.

The key is to make sure your credit utilization stays low when you open new cards. Don’t increase your spending just because you have more available credit. Also, keep your oldest credit cards open to maintain a long credit history.

Opening Multiple Credit Cards Can Hurt Your Credit Score If…

On the flip side, opening too many new credit cards in a short period can damage your credit if you’re not careful. Here are some potential pitfalls:

• Increases credit inquiries – Each credit card application triggers a hard inquiry on your credit report, which can lower your scores, especially if you have several in a short timeframe.

• Lowers average age of accounts – Your credit score considers the average age of all your accounts. Opening many new cards can decrease your average account age, hurting your scores.

• Causes high credit utilization – If you max out multiple cards, your overall credit utilization shoots up, significantly damaging your credit score.

• Leads to missed payments – Juggling multiple card payments raises the risk of missing due dates and damaging your credit through late payments.

• Increases debt – It’s tempting to overspend when you have access to more credit. Taking on debt that you can’t pay off can lead to even bigger credit problems.

The impact on your credit really comes down to how responsibly you manage the cards. Open accounts slowly over time, keep utilization low, pay on time, and avoid debt.

Tips for Opening Multiple Credit Cards Without Hurting Your Scores

If you want to open more credit cards to maximize rewards, here are some tips to do so safely:

• Check your credit reports – Review your credit reports before applying to spot and correct errors that could hurt your approval odds.

• Focus on your credit utilization – Make an effort to keep your credit utilization below 10% across all cards to offset the impact of new accounts.

• Pay on time – Set up autopay or calendar reminders for every card payment to avoid missed payments.

• Space out applications – Apply for only one or two new cards every six months or so. Too many at once raises red flags.

• Leverage preapprovals – Accept prequalified card offers which don’t require hard credit inquiries until you formally apply.

• Keep old accounts open – Maintain your oldest credit cards to sustain a long credit history even as you open new accounts.

• Ask for credit line increases – Request higher limits from issuers after making payments reliably for six months or more. This also helps lower utilization.

The Bottom Line

Opening multiple credit cards can be credit neutral or even credit positive if you practice good habits, such as keeping balances low, making all payments on time, and spacing out new applications. But opening too many cards at once or mismanaging accounts can certainly hurt your credit score. Monitor your credit regularly and adjust your approach to ensure new accounts improve your credit rather than harm it. With responsible use, numerous credit cards can actually strengthen your credit profile.