If you are like many Americans, you carry from five to 10 credit cards, or maybe as many as 50, according to Bankrate. If you think you're carrying too many cards, you may hope that reducing the number you carry will help your credit rating. Depending on your financial situation, carrying fewer cards may or may not be a good idea.
Closing Accounts
When you close a credit card account, you raise the amount of used credit in relation to available credit, which is referred to as your credit utilization ratio. A higher ratio means you are closer to using up all your available credit. Also, if you close an account you've had for many years for which you've always made timely payments, it lowers your length of credit history. In both instances, you will lower your credit score.
Types of Cards
Carrying too many of certain types of credit cards can have a negative impact on your credit score, according to CNN Money. Retailers are often quick to sign you up for a store credit card, and they make it more appealing by offering discounts on purchases if you use them. However, opening too many of these accounts in short order can have a harmful effect on your credit, as you are considered by the Fair Isaac Corporation (FICO) credit scoring system to be a greater credit risk.
Proper Number
There is no perfect number of credit cards to carry, but a rule of thumb is to have from two to six. Be sure they are issued by Visa, MasterCard, Discover or American Express, as they are the most widely accepted. It can also be wise to set aside one card with a relatively low interest rate for financial emergencies.
Card Management
Manage your credit cards effectively to avoid racking up large amounts of debt and lowering your FICO score. Try to keep the credit utilization ratio under 50 percent for each card, even if means spreading a major purchase over more than one card. Only open a store credit account if you shop there frequently, so you can take advantage of discounts and other promotions.
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