Is this true? No more than 5 credit cards?

[DigitalArk]

I have read some article online that said mortgage/loan officers would frown on borrowers carrying more than 5 credit cards. So I am trying to just keep the 5 I have and no more.

The article is: How many credit cards is too many? by Marilen Cawad (Since I am not allowed to link it, you can google it. It's under point  4. You are having a difficult time getting a loan)

What do you think? Experiences?

[parakleet]

I don't think there's a hard and fast rule that can be cited for how many cards someone should have. It's all YMMV - depends on your AAoA, income, etc. I know people who have dozen+ cards with perfect 750+ scores. But they most likely have very thick files. Obviously, if you're just starting out and your AAoA is less than 1 yr and you have 12+  cards, that probably doesn't look great. 

[Shogun]

I think the problem would be carrying a balance on more than 5 credit cards.  And there's more to it than that.  What does the rest of your CR look like?  What's your DTI?  What's your income like?  These are types of things that a UW will look at when approving a mortgage.  The fact that one has more than 5 CCs wouldn't be a problem in itself.

[longtimelurker]

Certainly not an absolute rule, I have got many mortgages and have ~ 15 open cards at the time of application.

I'm more likely to believe there is a LOWER limit, i.e. they want to see say 2 open credit accounts, to show that you have experience handling credit.

They of course don't want large balances on your cards, these are obligations that may impact your ability to pay the mortgage.

And SOME lenders don't like to see huge credit limits, thinking that there is a potential risk that they would be used, but this is not all that common.    And that doesn't correlate to number of cards, e.g. 10 low limit vs 2 ultra-high-limit, the 2 might well be worse for such a lender.

So, my answer to your subject is "No", at least not in my experience.

[09Lexie]

Longtimelurker nailed it! A high number of cards with balances are a problem. Just like less than 2-3, they want to see how you handle debt but also do not want the potential for default.

In my experience a good UW would look at the whole package. Income, job, credit history and assets.

[sr383]

I found the article, which also said this:  "If "too many revolving accounts" is listed as a risk factor, it might be a good idea to ignore future card offers and think about closing some open accounts."

I've never heard of a FICO score that was negatively influenced by number of revolving accounts. "Too many with balances," perhaps, but not just "too many."

Has anyone run into this on a bona fide FICO report?

Heck, the FAKOs never seem satisfied unless you get more cards. 

[Shogun]

It's not the FICO scoring per se, it's the LO and the UW that are manually looking at the accounts.

[Themanwhocan]

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@sr383 wrote:

I found the article, which also said this:  "If "too many revolving accounts" is listed as a risk factor, it might be a good idea to ignore future card offers and think about closing some open accounts."

I've never heard of a FICO score that was negatively influenced by number of revolving accounts. "Too many with balances," perhaps, but not just "too many."

Has anyone run into this on a bona fide FICO report?

Heck, the FAKOs never seem satisfied unless you get more cards. 

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Its almost as if they are making money by getting people to apply for credit cards. But no, thats just crazy talk.

[Haroon]

My brother who has great credit was turned down down by a lender because he had too many cards (6), and too much available credit. All the cards reported 0 balance at time of application. They said number of revolving and amount of available credit were risk factors.

[Shogun]

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@Haroon wrote:
My brother who has great credit was turned down down by a lender because he had too many cards (6), and too much available credit. All the cards reported 0 balance at time of application. They said number of revolving and amount of available credit were risk factors.

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Then he should get another lender.  With good credit, he can shop.