Theres not a one-size-fits-all solution for the number of credit cards a person should own. However, its generally a good idea to have two or three active credit card accounts, in addition to other types of credit such as student loans, an auto loan or a mortgage.
Just remember: The number of credit cards you own is less important than how you use them. Be sure that you can keep up with your existing monthly payments before considering a new credit card.
Getting your first credit card is an important step in building your credit history. But at some point, you may wonder if getting a second card could help build your credit even faster The short answer is that it potentially can, but there are some caveats to be aware of
How Credit Cards Help Build Credit
When used properly, credit cards are an easy way to demonstrate responsible credit behavior. Making on-time payments shows lenders that you can manage debt in a timely manner. This has a positive effect on your credit scores which are meant to be a snapshot of your creditworthiness.
The more you use your credit card (within reason), the more positive payment history you build up Most credit scoring models look at your payment history over the last 12-24 months. So the longer you’ve had your card and paid it on time, the better.
The Potential Benefits of a Second Card
Getting a second credit card account can help build your credit in a couple ways:
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It increases your total available credit. This helps lower your credit utilization ratio as long as you don’t rack up big balances on both cards. The lower your utilization, the better for your scores.
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It adds more positive payment history as long as you continue to pay your bills on time. The longer your positive history, the better.
So in theory, a second card can accelerate credit building by boosting your total available credit and giving you another account to build positive history with.
But More Cards Isn’t Always Better
However, there are a few reasons why getting multiple credit cards in quick succession may not be the best move:
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Each credit card application triggers a hard inquiry on your credit report. Too many hard inquiries in a short period can negatively impact your scores.
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Getting several new accounts at once will lower your average account age. The older your accounts, the better for your credit.
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Opening multiple new accounts could signal greater credit risk if you don’t manage the cards responsibly. This could cause issuers to lower your credit limits.
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Having access to more credit could tempt some people to overspend. If you rack up balances on multiple cards, the benefits will be negated.
The Ideal Strategy
The ideal strategy is to open your first card, use it responsibly for 6-12 months, and then consider adding a second account. This gives you enough time to build positive history with your first card before taking another hard inquiry.
It also allows your average account age to increase so any age drop from a new card isn’t as pronounced. And showing responsible use of one card first may get you higher initial limits on subsequent cards.
Once you have two or three major credit cards in good standing, there’s less benefit to continuing to open more accounts solely for credit building purposes. At that point, what matters most is consistently demonstrated responsible behavior.
Responsible Habits Are Key
No matter how many credit cards you have, the keys to building credit are using them responsibly:
- Pay all your bills in full and on time every month
- Keep credit utilization as low as possible
- Avoid applying for more credit than you need
- Monitor your credit reports and scores so you understand the impact of your behavior
Focus on building these habits, and your credit scores will gradually improve over time whether you have one card or two. Ultimately, having access to more credit is only helpful if you use it wisely.
The Bottom Line
Getting a second credit card after 6-12 months of responsible use of your first card can provide a boost. But don’t go overboard opening too many accounts too fast. Stick to a few major cards, use them prudently, and your credit will be in great shape before you know it.
How multiple credit cards affect your credit score
Having multiple credit cards can indirectly impact your credit scores by lowering your debt to credit ratio—also known as your credit utilization rate.
Your credit utilization rate is the amount of credit you use compared to the total credit available to you. Lenders usually like to see a credit utilization rate below 30 percent. A rate higher than 30 percent may negatively affect your credit scores.
When you open a new credit card, you increase the total credit available to you. That means youll be able to spend more before hitting that 30 percent credit utilization rate. If your rate is already at or above 30 percent, opening a new card could improve your credit scores by lowering your credit utilization rate.
However, the most important thing to do with multiple credit cards is to keep up with what you owe. Be sure to monitor how much you spend on each credit card and the payment due dates so that you dont go into credit card debt, pay high interest rates or get charged fees for missing a payment. Its also a good idea to pay off your credit card balances in full each month instead of only making the minimum payment.
How often should you apply for a credit card?
Its true that keeping multiple credit cards can sometimes benefit your credit scores. But that doesnt mean you should apply for more credit than you can reasonably use.
When you apply for a new credit card, a lender will request a copy of your credit report from one or more of the nationwide consumer reporting agencies (Equifax, TransUnion and Experian) as part of the application. This process is known as a hard inquiry. Too many hard inquiries over a short period of time can be a red flag to lenders and lower your credit scores.
Why? Because applying for multiple credit cards may suggest that youre spreading yourself too thin and taking on more credit than you can reasonably repay.
Apply for a new credit card when you feel it makes sense for your overall financial situation.
Will I Build Credit Faster With Multiple Credit Cards? – Credit Card Insider
FAQ
What is the 2/3/4 rule for credit cards?
The 2/3/4 rule: According to this rule, applicants are limited to two new cards in 30 days, three new cards in 12 months and four new cards in 24 months.
How many credit cards should I have for an 800 credit score?
“Three or four is a good number for a lot of people, but you can build credit with as little as one,” Rossman said. Research from Experian found U.S. consumers carried 3.9 credit cards on average in 2023 — down from 4.2 in 2017. But Americans with exceptional FICO scores — 800 to 850 — had 4.8 credit cards on average.
Will a 2nd credit card help my score?
If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended.
What brings your credit score up the fastest?
Keep paying your bills on time.
In many credit scoring formulas, your payment history has the greatest effect on your overall credit scores. So, it’s critical to make payments on time.