Does Having Too Many Credit Cards With a Zero Balance Affect My Credit Rating?

A pile of credit cards is just a pile of cards if you don't use them.

A pile of credit cards is just a pile of cards if you don't use them.

Multiple credit cards are a quick recipe for disaster because the temptation to run up balances can be overwhelming, particularly if you're short on cash. However, having multiple credit cards with a zero balance doesn't affect your credit negatively if you resist the temptation to use the cards.

Carrying Card Balances

About 30 percent of your credit score derives from the amount of debt you owe and how close you are to your credit limit. Consequently, a zero balance on your cards improves this portion of your credit score, and paying down your cards can provide a boost in your creditworthiness. Carrying no balance on your credit cards is one of the best things you can do to improve this portion of your credit score.

Credit Utilization

Debt utilization is a measure of how much of your available credit you are using. It's generally best to keep the number lower than about 20 percent across all accounts. A zero balance on your cards improves your score. Large loans or a large balance on some cards can lower your score.

Payment History

Your payment history accounts for 35 percent of your credit score. If you pay down your cards after missing payments, then you might not see a huge improvement right away. However, carrying no balance on your cards means that you don't have to worry about missing payments, and this can help steadily improve your score over time.

Individual Factors

There's no way to predict your credit score based solely on the number of cards you have. Your score can go up if you have several different types of accounts such as a mortgage, a secured loan and a credit card. Your score also tends to go up as the age of your credit file increases. Applying for new cards can temporarily lower your score. Consequently, you'll need to review your specific credit history to get a feel for the actions that might improve your score.

 

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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