Is There Any Way You Can Have Too Much Credit?

Credit card rewards programs are so competitive that there’s a high-earning card for just about every common expense: from groceries to gas to airfare, restaurant purchases and more. The offers are so tempting that it can be hard to resist applying for a new one — especially because many cards come with a big sign-up bonus.

But as your stack of plastic grows, you may begin to wonder just how big an impact all these cards are having on your credit score. Is there such a thing as having too many credit cards?

Though you won’t necessarily hurt your credit score by simply having a lot of credit cards, there are some risks that you need to watch out for.

Credit cards: too much of a good thing

When determining your credit score, credit scoring companies don’t judge the number of credit cards you have. What they do look at, though, is how much credit you have available, how responsibly you’ve been managing it and how many loan accounts you’ve opened recently. Though owning many credit cards isn’t inherently an issue, it can become a problem if you then rely on them so much that you get behind in payments.

That said, some lenders may be less forgiving. Anecdotally, a number of cardholders have reported being rejected for credit, in part, because of too many revolving accounts.

The risks of having too many credit cards

Applying for multiple credit cards means a series of hard inquiries on your credit report. This can temporarily ding your credit score.

Your score will probably recover quickly since the impact doesn’t last long. It may even benefit you over the long run since having more credit helps bring down your credit utilization rate. However, lenders typically don’t like to see you opening a lot of new accounts at once.

Adding more cards to your credit report can also shorten the average length of your credit history.

The biggest risk you take when you open a number of new cards, though, is that you could start to run up too much debt and fall behind on payments.

You may also run into trouble if you try to get too strategic with your rewards earnings. Some rewards hunters, for example, may carry a stack of different cards for everyday expenses.

For example, you might use one card for groceries, another for gas, a different card for dining, another one for travel and a flat-rate card for all your other expenses. It’s a strategy that can yield huge savings. But it only works if you stay organized and avoid letting any of your cards slip. If you fall behind on one or more of your bills, it will severely bruise your credit score.

In addition, too many cards could make it tempting for you to overcharge.

Tips on managing multiple credit cards

If you’re the type of borrower who never misses a payment and always pays their bills in full, then you may have no trouble juggling a lot of credit cards. You may even boost your credit score by proving how well you can handle a lot of credit.

But if you’re disorganized or tend to carry balances, owning more than a few cards could be too big a risk.

Stay on track with your bills by setting up automated payments. Also consider carrying just some of your cards regularly. That could make it easier for you to manage them. Finally, don’t forget to continue using your oldest cards, even as you accumulate new ones. Closing an old credit card — or letting your creditor close it due to inactivity — could also harm your credit score.