Does Having Multiple Cards Affect Your Credit Score?

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An anonymous commenter wrote in the following:

“For all you people who enjoy bragging about the amount of credit cards you have with the best point systems, you should know that (according to equifax )having multiple cards could damage your credit score as it shows you have some financial instability. For all the headache and bother you get from managing cards and their points, you could get an honest job and make back that money. I have 1 single card for the past 4 years and Bank Of America has increased my credit to $11,000 on their own and my score is more than 800.”

Wow-1 credit card…it’s been years since I’ve had just one!
Im not sure where you read that having multiple cards is bad for you, but its simply not true. Opening multiple cards at one time can be bad-and I’ll discuss those ramifications below.

I don’t claim to be an expert on the many factors that comprise one’s credit score, however I have done tests and am confident that in the long run there is nothing to lose by having multiple cards.

According to Fico:
-65% of your credit score is your payment history and the current amount owed.
-15% is the length of your credit history.
-10% is new credit.
-10% is the variety of credit that you have.

The 65% includes the number of accounts that are in good standing, and the percent of credit that you use. So the more accounts you have open-the better this category gets, because you have more accounts that get paid on-time, and you utilize a lower percentage of your overall credit.

Anon-if you were to need to spend $10,000 for whatever reason, your credit would take a HUGE hit, because you would have a very high percentage of your credit limit used up. For me on the other hand it wouldn’t even show as a blip on the screen.

So far I’ve covered the positives of having many cards and a high credit limit.
The downside is that opening a card directly affects the 10% category of new credit-but here’s the rub-since it only looks for accounts opened in the past 6 months or so opening a card can only hurt you for a maximum of approximately 6 months. There are no lasting long-term affects to your score, so as long as you are not buying a home or taking out a loan-go apply for a card and enjoy the free trips that the banks are currently doling out like never in history.

In my informal tests on my own credit score I have found that upon applying and getting a new card my score will lost a few points, however after paying it off for a few months it will go higher than where it started off at. Even with the dozens(yes, dozens) of cards that I have opened in the past 12 months my credit score has gone up by some 40 points!

Bottom line:
Don’t worry about opening numerous cards unless you are buying a home or taking out a loan in the next 6 months. Enjoy the gravy train of credit card offers while they last!
Also keep in mind that as far as lenders are concerned you will get the same rate whether you have a 765 or a perfect 850. Either way you will get a top-notch rate, as you are a safe creditor and pay your bills on time-which is by far the most important factor.