Why so many CCs?

[Dawn]

As I continue reading these boards, I am confused about something that I see frequently. 

Why do people feel the need to have so many CCs? 

Does this flawed credit scoring system honestly work more in our favor if we maintain 5-6 CCs instead of one or two?  I am having a hard time comprehending why we need to complicate our lives with trying to juggle more than one or two CCs. 

I realize that lenders seem to think that if we can stay on top of mortgage and auto loans, as well as multiple CCs that we are somehow "better" risks than someone who only uses one CC.  But ... how much logic is there to that theory?  For every additional, active account we have, there seems to be GREATER risk that we will slip up.  Why do we have to balance precariously on that tight rope when we could probably be far more dependable with just one or two cards?

For the past 15  years we have pretty much exclusively used one VISA card and PIF each month. We are "older than dirt" and were very reluctant to embrace the bank card life style.  We previously only used store credit cards or cash (and had justification for multiple cards) ... but once we had an "all purpose" bank card, we saw no reason to keep the store cards active.

Are the CC TLs just stepping stones to auto loans and mortgages?  Once you have those mortgages and auto loans (and their history on your record) do you really NEED to maintain multiple CCs?

In a day and age where people are over-extending themselves, it seems to me that this credit scoring system is only adding fuel to the fire.  I find it very frustrating. 

[Anonymous]

If you have Good to Excellent credit - you are right 2 CC's is plenty.

Some here are OCD on getting more cards
Some are diluting bad credit with good
some are killing off sub-prime cards with fees

I can tell you after graduating from credit HE** it feels very good to get real cards.

"They only give you credit when you don't need it"

Message Edited by Timothy on 10-12-2007 07:33 AM

[Dawn]

Timothy ... thank you for sharing that perspective.  My heart aches for all of those who have been through credit HE** as you put it  and I am seeing that the game plan is different for different people depending upon where they are in that credit cycle. 

Message Edited by denbar2003 on 10-12-2007 10:07 AM

[Anonymous]

Well put Timothy. You gave 3 reasons for more cc's. My reasons are #2, and #3, with primary weight to #3. 3

And it feels VERY good to graduate from h.u.

[John060675]

The reason I have 6 CC's now (and 1 or 2 more soon) is definitely to build a better reputation and higher FICO score (mine score used to be very bad).

There is a side reason, also.  I want to make sure that I have emergency back-up, just in case.  Until I can get $25,000 CL, then I am forced to carry 6 CC's.

[Anonymous]

If you think it's bad here, you should see some of the other credit forums. The $40K in CL across 14 CCs DW and I are juggling are gonna get simplified by setting the payment due dates to two dates. Half on the 15th and half on the 30th. If you juggle more than 1 or 2, you should do something similar.

More CCs means more leverage against one's CCCs. If they know you have 5 or 6 other CCs with several thousand in CL on each, one may be able to pressure a higher CL and/or lower APR. Works with some, not so much with others.

More CCs is also a form of insurance. Banks get bought and sold all the time. That one CCC which is judged best in the world by whomever might get bought by the worst CCC in the world tomorrow. Just like with investing, not all the eggs in one basket.

There are anecdotes about people who have 2 or 3 CCs, they've kept them for years, and they have FICO scores in the 800s. However, I find many more anecdotes about people who've been forced into mandatory arbitration, had judgments against them, or otherwise fallen into Credit Gehenna when they either never owed the money (like if they were only an AU on a CC) or the account was never late. Some of these might have been mitigated by more CCs.

I think it used to be true that one was safest with just a few CCs. These days, and not just as someone who has climbed outta the Pit of Credit H*ll and is still crawling over the rim of the Abyss, I think more is better.

People can get into trouble with just 1 or 2 CCs. But if you can manage 1 or 2 CCs, then you can manage 5, 10, or even 20.

As for mortgages and car loans, we're a much more mobile nation today than say even 15-20 years ago. Might not stay in that home for 30 years.

[Anonymous]

Noah,

Well put!  I love your post.

I have high credit lines on my AMEX cards. But I don't have those same lines on my Visa or MC. 

I still had some crappy cards on my reports that I got after BK.  I am not about to pay a fee for a credit card unless it's my AMEX Gold rewards!  I have applied for new cards, now I am a member of the Sleigh Center and have NO plans on getting any more.

My goal is to lie low and get credit line increases.  My credit scores took a huge DIVE in the last month. Because of inquires and collection accounts appearing.  I am working on removing those items.

But I don't want AMEX to be the only card with a $25K.  I have investments and savings but it takes time to get a very large amount of money moved into an account I can touch.  My credit cards give me the feeling of protection in case something should happen.  This is why I try to keep the balances very low or none at all. 

I figure in 6 months some of my accounts will age and a ton of inquires from last year will no longer effect my scores. 

[Anonymous]

I will end up keeping some cards for age (store cards) and replace some of the not-so-good ones with better MC/V but in order to do this I need the better one before I dump the not-so-good one.

It's shuffling them until I get the mix I am happy with and that suits my life.

Case in point, I need to make a trip next month because Mom is having surgery - a hotel room for at least 2-3 nights, food, and gas there and back - spreading this over several cards doesn't kill my util on any one.

[fused]

OP, good questions and a very interesting subject! I would think there would be a lot more discussion on this subject in this forum but there hasn't been much. Personally, I don't think anyone has to have a lot of CCs to establish a solid CC history, 2-3 CCs is sufficient.

I have 5 credit cards, 1 lousy Macy's and 1 charge card. I choose to have this many cards because all but one, Macy's, has their own perks. For me it's all about the perks...cash back, FF miles and points converted to $ for my little girl's 529 college savings plan.

If given the choice I would much rather have total available credit of 50K spread out on 3 CCs versus 10 CCs. Duh, it's easier to manage 3 CCs than 10.

[Anonymous]

I only use 2-3 cards for personal use. The rest are for business to help with accounting. 1 card per expense, 1 total per expense. Takes seconds to do accounting.

But there is an advantage in scoring later down the road with more cards. More open accounts to keep up average age when they get older.

As for the obsession for so many cards. After being denied for so long it feels good to be approved by all the places that denied you I guess. Also with credit lines of only $200 it is another way to raise total CL for UTL. But if you have a few high limit cards it doesn't matter nearly as much.