“ The swerve number of credit card accounts that a consumer has is a lot less crucial to the FICO Score than how the consumer is managing those accounts, ” Dornhelm tells CNBC Make It. “ Are they paying their bills as agreed ? Are they keeping their balances low proportional to available credit limits ? These actions are the most significant drivers of their FICO score. ” hush, it ‘s utilitarian to consider the wallets of people with capital citation. In a recent analysis, FICO found that cardholders with scores above 800 — the excellent range is 750 to 850 — had an average of three exposed cards, according to Dornhelm. If you include both loose and close accounts, they ‘d had six cards in sum. Since the numeral of cards you have can affect your credit score in subtle ways, a well as impact how much you earn with unlike types of credit card rewards, here are three things to keep in mind when deciding whether to get a new card .
Adding a new card can help your credit score
Adding a new card is one way to increase the credit available to you, which allows you to spend more while distillery maintaining a safe utilization ratio, or the total you ‘ve spent compared to your credit limit. “ The lower your ratio of balances to your entire credit rating limits, the better, ” says Dornhelm. As a rule, you should try to keep your use proportion below 30 percentage. You can figure out what it is by adding up your monthly spend — the balances on all your cards — and divide that number by the kernel of your limits. For example, carrying a balance of $ 200 and having a credit terminus ad quem of $ 1,000 would give you a utilization proportion of 20 percentage. If the proportion is excessively gamey, getting a newfangled card could lower it since it raises your entire recognition limit — ampere long as your outgo stays the lapp .
Closing old accounts can hurt your score
If you do get a new tease, don ’ metric ton rush to cancel your old ones. Over time, closed accounts are nobelium long included on your credit report, which could reduce the “ average age ” of your account. Plus, “ by closing a credit rating card explanation, the consumer is taking some of their available credit off the table, ” says Dornhelm. That could have a more contiguous impact on your credit score.
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candid even inactive accounts, on the other hired hand, wo n’t harm your sexual conquest. In fact, they might help it by increasing your available accredit. There are some situations, like when a card you ‘re no longer using has an annual tip, where it might be worth closing the account, not for the sake of your seduce but to save money. tied in that font, though, there can be loopholes. “ You may be able to ask the credit wag issuer to waive the fee or convert the report to a card product that does n’t have an annual fee so you can preserve the account historic period on your credit reports, which can be better for credit scores, ” John Ganotis, founder of CreditCardInsider.Com, tells CNBC Make It .
A new card can offer more than just credit
understanding spenders may use multiple cards to rake in different kinds of rewards. “ person might want a tease that earns more cash back in certain categories, like groceries or boast, and another circuit board that earns a flat cash back rate on all purchases to use for spend in categories where the first gear card would n’t earn more, ” says Ganotis. indeed if you ‘re looking for a newly poster, consider one that offers new perks and rewards to complement the cards you already have. Just keep track of your annual fees to ensure the rewards are actually worth it. And do your inquiry before you apply to make certain it ’ s not lone one you want but one you ’ re qualified for, since the application process requires a credit question. One of those normally shaves a few points off your score, though nothing drastic. If you ‘re felicitous with your current benefits and citation line, there ‘s probably no reason to complicate your situation with a new calling card. Don’t miss: We looked at the 35 most popular travel credit cards—here’s our pick for No. 1 Like this story? Subscribe to CNBC Make It on YouTube!