The Credit Card Illusion
I just recently got into another argument on whether or not having multiple credit cards is a bad idea, so, naturally, I’ve decided to write about it on Medium.
Opening a new credit card lowers your rating : True.
Closing A card lowers your rating: True.
Having multiple credit cards lowers your rating: false.
Let me explain. Your credit score is calculated using a system that weighs many different factors. They take your amount of available credit, credit being used, balances, and your ability to repay debt.
Someone with 20k in credit and 15K available, would be worse for wear than some one with 30k in credit and 25K available.
The more credit you have, the more leeway you have available to your. Every month you end with a balance also lowers your score.
The goal with multiple credit cards is this: Keep no balance, take the maximum amount of available credit, and avoid annual fees.
Simple as that. Now, I must return to Christmas shopping.