How Many Credit Cards Should I Have to Improve My Credit?

It’s not about how many cards you have — it’s about using your credit cards wisely.
Last updated Oct 6, 2020 | By Lindsay Frankel
Man typing his credit card number on a laptop

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It can be tough to recover from blemishes on your credit report.

Late payments and accounts in collections generally stay on your credit report for seven years, so even if you’ve wised up financially and make all of your payments on time, your credit score might still paint a different picture to potential lenders.

But positive behavior has an enduring effect on your credit as well, which is why using a credit card and paying off your balance on time every month could improve your credit score. And a “good” or “excellent” credit score can open the door to some sweet rewards cards, lower interest rates on loans, lower insurance premiums, and more.

How many credit cards should I have to improve my credit?

When it comes to credit cards, how you use them is far more important than how many you have. Smart spending and responsible credit card use will have a positive effect on your credit score, whether you have one credit card or 10.

That being said, there are benefits to having multiple credit cards.

For instance, holding several cards can give you access to a higher total credit limit, which can make it easier to maintain a low credit utilization rate — a factor that makes up 30% of your FICO credit score. But if you keep your balance low, you can achieve a low utilization rate with just one credit card, too.

Another practical reason for having more than one card is you may want to have a backup in case one of your cards is lost or stolen. Also, certain cards have benefits and rewards that others don’t. Say, if you’re traveling abroad, you may prefer to use a card with no foreign transaction fees.

But having too many cards can make it more difficult to manage your money, which puts you at risk for making late payments or accruing interest. Plus, not everyone can resist the access to huge lines of credit. If you think you’ll be tempted to run up big bills for unnecessary purchases, having too many credit cards may land you in debt.

Applying for several cards in a short period of time may also hurt your credit score, since many issuers pull your credit with hard inquiries that can stay on your credit report for up to two years.

So how many credit cards should you have? There’s no magic number — it depends on your current financial situation, your needs, and your goals. But whether you have just one or a handful, using your credit cards responsibly should be a priority.

How to use credit cards to improve your credit

If you’re not happy with your credit score, there are several ways you can improve your score relatively quickly. If you use the right card responsibly and strategically, you might be surprised by how much your score can change.

1. Choose the right card

If you have poor credit, your choices may be limited. A secured credit card can be a good option for people who tend to overspend, since these cards require a refundable deposit, typically in the amount of your desired credit limit.

These cards also tend to be easier to acquire than traditional credit cards, but they aren’t the only ones you could qualify for. Here are a few credit cards made specifically for people with less-than-perfect credit.

  • Capital One Secured Mastercard: This card requires a deposit of $49, $99, or $200 to get an initial $200 credit limit, depending on your creditworthiness. You can make a larger deposit to get a higher credit limit up to $1,000. Plus, there’s no annual fee.
  • Discover it Secured: Choose your deposit depending on the credit line you want for this card. There’s no annual fee, and this card has fairly robust rewards. Plus, Discover will match your earnings at the end of the first year.
  • Capital One Platinum Card: This card comes with no annual fee, and you can get a credit limit increase after five months of on-time payments. You can also utilize CreditWise, which gives you access to your credit score along with other credit monitoring tools.

2. Pay on time and in full

Every credit card payment you make will be reported to the three major credit bureaus, and on-time payments will positively impact your credit score. To avoid hurting your credit, you’ll want to make at least the minimum monthly payment. But paying your bill in full will reduce your utilization rate, which also helps build credit.

Take advantage of autopay options for your card, since an automatic payment will ensure you don’t forget, but always make sure you have enough money in your bank account to cover the payment.

3. Keep your balance low and your credit limit high

When calculating your credit score, agencies take your credit utilization ratio into account. Your utilization ratio looks at how much credit you have access to versus how much of your credit you actually use.

For example, say your total credit limit across all your credit cards is $1,000. If you charge $400 to your cards, your credit utilization is 40% — meaning you’ve used 40% of your available credit.

It’s generally recommended to keep your utilization rate below 30%. The easiest way to lower your utilization rate is to charge fewer purchases to your credit card. But you could also lower utilization by increasing your credit limit. Once you’ve made on-time payments for a few months, consider asking your credit card issuer for a higher credit limit.

4. Avoid closing old cards

Even if you’ve gotten a little too credit card happy and have more cards than you can use, avoid closing accounts when possible. Since the age of your credit history impacts your credit score, closing an old account may hurt your credit. Closing an account also lowers your total credit limit, which negatively impacts your utilization rate.

If you’re worried about overspending with too many cards, lock your card away, cut it up, or bury it — just don’t close the account if you can help it. The exception to this rule of thumb is a card with an annual fee. If an unused card is costing you money to keep it open, consider asking the issuer if they can downgrade you to a card with no annual fee instead.

5. Consider becoming an authorized user on someone else’s account

If you know someone with good credit who pays their bills on time, you could benefit from their healthy credit history by becoming an authorized user on their account. Most credit card issuers will report payment activity to the credit reports of authorized users, so your score could see a boost as the primary account holder pays their bills.

Just make sure you don’t overspend, since the primary account holder will be legally responsible for making sure the account gets paid. Also make sure you choose someone who will be responsible, since missed payments could hurt your credit.

6. Monitor your credit report and score

It’s always a good idea to check your credit report at least once every year to make sure there aren’t any inaccuracies driving down your score. If your goal is to improve your credit, you may want to check your score more often so you can celebrate your successes. Consider a service like Credit Sesame to keep tabs on your score for free.

You could see a boost in your credit score sooner than you think

A bad credit score doesn’t have to be a permanent problem. You can start to raise your score in as little as 30 days with some of the strategies outlined here.

As you display healthy financial habits, your score will continue to improve. Take advantage of available technology — from autopay features to apps that help you budget — to ensure you make payments on time and in full. It may take a while to see your score exceed 800, but each improvement to your score brings new financial possibilities.

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