Why have multiple credit cards is good for your credit

Why have multiple credit cards is good for your credit -

Contrary to popular belief, having more than one credit card is actually beneficial for your credit health. One of the most important factors in determining your credit score is your credit utilization ratio, pictured right. In fact, it represents 30% of your credit score.

More use your credit report, more positive impact it has on your credit score. To maintain a low credit utilization, the amount of debt you need to be well below the amount of credit you have. In general, if you want to have an excellent credit rating, we recommend that you keep your credit utilization rate below 30%. Keep around 10% is even better.

This is where the benefit of several credit cards comes in.

The more credit cards you have, the more available credit you have under your name, making it easier to keep your low utilization rates. Keep in mind that you can have a high ratio even if you pay your balance in full each month. Credit cards report your current balance (often your statement balance) and the credit available to the office each month. So if you have only one card, your balance is $ 8,000 and your credit limit is $ 10,000, you will have a 80% utilization rate, even if you pay your balance in full. If you add another card with a limit of $ 10,000 and still spend $ 8k per month between the two cards, your ratio will drop to 40%, providing a big boost to your credit score.

Apply for credit cards that you have a better chance of being approved.

Each time you apply for a new credit card, a hard inquiry shows on your credit report. Although difficult investigations have a minor negative effect on your credit score, this negative impact is low and short-term. Compared the positive impact of reducing your use of the credit rate, the effect of difficult investigations is quite minimal.

When you apply for credit cards, make sure first that you are applying for a card that you have a good chance of being accepted for. Although credit cards that require "excellent" credit usually look for credit scores of 700 and often 750, there is great credit cards that require just a "good" credit score, which can be as lower than 650. Not only getting one of these credit cards lower your credit utilization rates and boost your credit score, but many of these credit cards also offer stellar rewards.

Here are some of our best choice (if you are unsure of your credit score, you can get free - and a detailed explanation - by signing up for a free trial of one of our senior credit monitoring services)

the best credit card for good credit :.

Offering 0% for the first 15 months on purchases and balance transfers, Chase Freedom is just as good or better than most cards targeting those who "excellent" credit, which in is our first choice for those who have just "good" credit. In addition to letting you pay no interest for more than a year, it offers great rewards like cash back receive $ 100 cash back after spending $ 500 within the first 3 months. In addition, you will earn money on all your purchases - 5% cash back on purchases in rotating quarterly categories and 1% cash back on everything else. No annual fee, this credit card is the perfect tool to add to your arsenal of credit -. Increase your credit score and make money while doing

The best average credit card:

Barclaycard Rewards MasterCard
If your credit is just average ( generally considered somewhere between 600 and 680), no worries, the Barclaycard rewards MasterCard is another great option to increase your credit score, while earning rewards. This credit card has no annual fee and cash back rewards. You can earn 2 points per $ 1 spent on gas purchases, groceries and utilities, and 1 point per $ 1 on all other purchases. This card is designed for those with average credit, but if you boost your credit score by lowering your credit utilization with multiple credit cards, you can quickly increase your score enough to get a credit credit card in the "good" or "excellent class". Also, if you use the card to earn rewards and pay off your balance every month, you will not be paying interest anyway.

The best card credit cash rewards:

BankAmericard Cash Rewards

If you have excellent credit and approved is not a concern, then why not improve your credit score while winning cash? BankAmericard Cash Rewards is our preferred choice for cash back cards because you can earn a cash bonus awards of $ 100 after spending at least $ 500 in purchases within the first 90 days. Indefinitely, you can earn 1% cash back on purchases, 2% in grocery stores and 3% on gas for the first $ 1,500 of purchases combined grocery and gas each quarter. Add in the 0% APR for 12 months on purchases and balance transfers and no annual fees, and this card is superb all around.

It is also important to note that most credit history reflects better on your credit score. Because of this, the new credit users should not open new credit accounts too rapidly. As we have mentioned, with more than one credit card lowers your credit utilization rate and is good for your credit score, but that does not mean you should open three credit cards at once - slow and steady wins the race. To find the perfect credit card to increase your credit score, check out our full review of credit cards and comparisons, and try our personalized credit card selector.