Help a newbie understand

Taylor814ce · ‎01-25-2015

Hi,

Some newbie questions but I really need help understanding this credit systems.

1. Say you pay everything off each month. Why does having more credit card increase your score? I alway though just having 1 or 2 card is ultimate way of incrasing score but many on this forum have 5,6, etc cards.

2. What is the magic number of cards one should have for ultimate score?

3. If you can start all over, which cards would you recommend?

Thank you

Anonymous · ‎01-25-2015

Ideally 3 cards is enough. People have more because they have more uses for other cards and maximize their rewards (unless they have more than 20, that's another story!)

I plan on sticking with 5-8 cards, I already have 4. Of the new ones, I will have no more store cards than what I have now, store cards aren't necessarily bad for credit, they're just useless in that they offer very little in the way of rewards. The thing that keeps me with Synchrony on my 3 cards is Walmart-Free FICO, Amazon-Good Financing, and Care Credit-0% for 12 months on medical expenses.

Your magic number might be different than mine, don't go with more than you can handle and more than you're willing to keep track of, and don't put balances on all your cards. If you have 8, only use 2-3 at a time. Rotate them as necessary.

Anonymous · ‎01-25-2015

@Taylor814ce wrote:
Hi,

Some newbie questions but I really need help understanding this credit systems.

1. Say you pay everything off each month. Why does having more credit card increase your score? I alway though just having 1 or 2 card is ultimate way of incrasing score but many on this forum have 5,6, etc cards.

2. What is the magic number of cards one should have for ultimate score?

3. If you can start all over, which cards would you recommend?

Thank you

#1. Even if you pay off every month, unless you pay off before statement cuts, if you pay after statement cuts you will still have a balance reporting. Having more credit available decreases utilization in terms of percentage of credit used, which is what Fico cares about.

#2. deally you should have I would say 3 or more cards for Fico purposes. Probably all else being equal a lender would prefer to see 5 cards with 10 year payment history each than 2 cards with 10 year history each.

#3. Start with no AF cards that you know you will use for a long time. A capital one card is good because it can be changed to a no AF quicksilver later on. Don't do store cards unless you really shop there more than once a month.