How Many Credit Cards Are In Your Wallet?
So how many credit cards do you have in your wallet? Did you know that having too many credit cards can lower your credit score? It never ends does it? In the mail, on the radio, on the television, we are all inundated with commercials telling us why there credit card is better than the other guys.
We aren't good consumers unless we have numerous credit cards in our wallets.
So how many credit cards should you have?Before I answer that question let me explain how credit cards affect your credit score.
Every time you open a new line of credit it shows on your credit report.
It doesn't matter whether or not you use the line of credit, as long as the credit line is active it shows on your credit report.
Your credit report is a score that lenders use to determine what kind of a credit risk you will be.
It also affects the interest rate that you will be offered when you apply for a line of credit.
A perfect credit score is considered to be 850 while a poor credit score would be a score of 590 to 650.
Each line of credit you have has a negative affect on your credit score, no matter how small it might be.
Yes, paying these types of accounts on time does keep your credit score healthy, but too many accounts does have an adverse affect on your credit score.
Credit cards with balances that carry for more than the typical 30 day billing cycle have an even greater affect on lowering your credit score.
Now don't get me wrong, in today's world it's nearly impossible not to carry some plastic in your wallet.
There are just going to be situations when you can't do without it, but there should be a limit to the number of credit cards you carry.
Generally the rule of thumb would be no more than four, and if you must use them try not to carry a balance past one 30 day billing cycle.
What should you do with all your other credit cards? You need to close the accounts.
Simply cutting the cards up and putting them in the trash will not close the account.
You will need to contact the customer service department and request that your account be closed.
Keep in mind that you can't do that until there is a zero balance on the card.
It generally takes up to thirty days for the credit card company to complete your request.
When you make your request to close the account be sure to tell the customer service rep that you want it noted on your credit report that the account was closed at the customers request.
If this is not noted next to each account that you close and you close several accounts at once it could be misconstrued as a credit problem by other creditors and could also be detrimental to your credit score.
Have you ever received credit cards in the mail without even requesting them? Well these have a direct affect on your credit score as well.
How wrong is that? You didn't even request the card, they arbitrarily send you one and your credit score is affected.
Unfortunately you will need to follow the same procedure as before,and make a request directly to that credit card company that the account be closed.
So why do the open credit card accounts or other open lines of credit with zero balancesaffect your credit score? Each line of credit represents what lenders and the credit bureau would refer to as credit risk.
Even with the zero balances on the account, they consider these open lines of credit to be a risk because at any time you have the ability to borrow against them.
It's much easier and takes less time to lower your credit score than it does to raise it.
Making the right choices now in regards to your credit cards can save you money in interest rates, and make you a stronger borrower when you go to lenders to ask for a line of credit or a mortgage.
So how many credit cards are in your wallet? If the answer is more than four, then you should seriously consider doing some house cleaning to help sharpen your credit score.
We aren't good consumers unless we have numerous credit cards in our wallets.
So how many credit cards should you have?Before I answer that question let me explain how credit cards affect your credit score.
Every time you open a new line of credit it shows on your credit report.
It doesn't matter whether or not you use the line of credit, as long as the credit line is active it shows on your credit report.
Your credit report is a score that lenders use to determine what kind of a credit risk you will be.
It also affects the interest rate that you will be offered when you apply for a line of credit.
A perfect credit score is considered to be 850 while a poor credit score would be a score of 590 to 650.
Each line of credit you have has a negative affect on your credit score, no matter how small it might be.
Yes, paying these types of accounts on time does keep your credit score healthy, but too many accounts does have an adverse affect on your credit score.
Credit cards with balances that carry for more than the typical 30 day billing cycle have an even greater affect on lowering your credit score.
Now don't get me wrong, in today's world it's nearly impossible not to carry some plastic in your wallet.
There are just going to be situations when you can't do without it, but there should be a limit to the number of credit cards you carry.
Generally the rule of thumb would be no more than four, and if you must use them try not to carry a balance past one 30 day billing cycle.
What should you do with all your other credit cards? You need to close the accounts.
Simply cutting the cards up and putting them in the trash will not close the account.
You will need to contact the customer service department and request that your account be closed.
Keep in mind that you can't do that until there is a zero balance on the card.
It generally takes up to thirty days for the credit card company to complete your request.
When you make your request to close the account be sure to tell the customer service rep that you want it noted on your credit report that the account was closed at the customers request.
If this is not noted next to each account that you close and you close several accounts at once it could be misconstrued as a credit problem by other creditors and could also be detrimental to your credit score.
Have you ever received credit cards in the mail without even requesting them? Well these have a direct affect on your credit score as well.
How wrong is that? You didn't even request the card, they arbitrarily send you one and your credit score is affected.
Unfortunately you will need to follow the same procedure as before,and make a request directly to that credit card company that the account be closed.
So why do the open credit card accounts or other open lines of credit with zero balancesaffect your credit score? Each line of credit represents what lenders and the credit bureau would refer to as credit risk.
Even with the zero balances on the account, they consider these open lines of credit to be a risk because at any time you have the ability to borrow against them.
It's much easier and takes less time to lower your credit score than it does to raise it.
Making the right choices now in regards to your credit cards can save you money in interest rates, and make you a stronger borrower when you go to lenders to ask for a line of credit or a mortgage.
So how many credit cards are in your wallet? If the answer is more than four, then you should seriously consider doing some house cleaning to help sharpen your credit score.
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