There are a lot of financial products available in the market which are designed for your financial needs and are always available at your disposal. Same goes for credit cards, there are a lot of card options by different card lenders which will give you different benefits. Many of us have a lot of myths surrounding credit cards and terms related to the same. One of them, which is the most frequently asked question is how many credit cards can I have? Is there harm in having multiple credit cards? Will that affect my credit score?
Well, for instance if you have multiple credit cards, it will not affect your cibil score. There are a lot of factors which affect your credit score but having multiple cards is definitely not one of them.
What really matters is, how you are using those cards and if you know all the terms and conditions of the card. As different cards offer you different benefits and also has different hidden pitfalls, you should be aware of all. The cibil score basically is calculated on the basis of these factors,
The most important factor which contributes to your cibil report is how you make your payments and if you are making payments for all the credit cards in time. The credit card lenders gives you a lot of options as far as payment go. You can make a minimum balance payment on your due date to avoid late payment charges, but if you make such partial payment you will be liable to pay interest on the balance due payment.
If the credit balances are relatively higher than your credit limits, your score will definitely suffer. The scoring formula favors borrowers who use 20% of their credit limit. It doesn’t matter if you are making full payments on the credit card dues, but your cibil score will get affected due to high credit limit exhaustion. It is suggested to make normal purchases with the credit card and try not to over spend it so that your score stays intact. Always keep the credit cards open but limit your spending to 20%.
Opening several credit card accounts at once can hurt your credit score. We understand there are a lot of various credit card options which are available and many of them are so attractive that you think of getting one. The lender, on the other, hand will hand you as many cards you want. But what you do not realize is, a lot of inquiries are being made towards your credit report by the credit card lenders and that will cause bad cibil score. In future if you are in need of a loan, you may be considered as a risky borrower considering your past credit history.
If the only line of credit you use is a credit card, then there are chances your cibil score will take a dip. You should always take secured loans from time to time so that your cibil score is maintained. We would suggest you take small consumer loans which are easy to avail at the same time will give your credit score the boost it needs, provided you make all the payments on time.
The length of your credit history also plays an important role to your score contribution. There are a lot of times, when you are fed up of a credit card and decide to make all the due payments and close it. Don’t do this ever! If you close your credit card account, it gets reflected on your report and stays in your report for a very long time which will then create problems for you in future while applying for a loan. Always keep your credit history open.
Using multiple cards won’t hurt your credit score, but that does not mean you can start using multiple cards. You can manage with a couple of cards also, but make sure you make all the payments on time.