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The advantage of having more than one credit card


People who only have one credit card available and are coming close to maxing out that card, might consider applying for another card in terms of how it affects their FICO® Scores. It has to do with what’s called credit utilization.

Utilization measures how much of your credit you are using in relation to your total available credit. If you have one credit card with $500 charged to it and a credit limit of $1,000, then your utilization is 50%. There’s no ideal utilization to shoot for, because as with most things, it depends on everything else on your file. But in terms of the risk of hurting FICO® Scores, people who keep their utilization on any one card below 50% will see less negative impact to their FICO® Scores. Research has shown that people who max out a single credit card are more likely to miss future payments, and therefore FICO® Scores consider people using more of their available credit as more risky than people who are using very little of their available credit.

Consumers with a moderate number of revolving accounts on their credit report generally represent lower risk than consumers with either a relatively large number or a very limited number of revolving accounts.

In addition to the number of cards, their limits and the amount a person charges on them, people who are cognizant of a card’s annual percentage rate (APR) can more responsibly manage their financial health. APRs are not currently reported by credit card companies to the consumer reporting agencies (CRAs), and therefore they are not explicitly considered when computing your FICO® Score. However, consumers who know the APR of all cards held can add any necessary debt to the card with the lowest APR, or pay off more debt on cards with higher APRs to decrease money paid toward interest charged.

This content is provided by FICO. © 2017 Fair Isaac Corporation. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.