It's Not the Number of Credit Cards You Have, It's How You Use Them That Matters

It's Not the Number of Credit Cards You Have, It's How You Use Them That Matters

Do you hesitate to apply for a new credit card because you've heard that doing so can harm your credit score and make it harder for you to get a loan in the future? If so, you're not alone. Many people fall victim to this false belief. Luckily, the truth is, the number of credit cards you have open does not have a large impact on your credit score. It's how you use those credit cards that really matters.

Approximately 35% of your FICO credit score is determined by your payment history. That means that if you pay your credit card bills on time every month, this portion of your score will be high. On the other hand, if you start missing payments, you can expect your score to drop.

How much money you actually owe on your credit cards is also important for determining your credit score. About 30% of your score, in fact, is determined by the amount of debt you have. That means that it's okay to open a new credit card -- just don't max it out.

What are the other factors that make up the remaining 35% of your credit score? Credit history is one. The longer you have been using credit, the higher you score will be. The type of credit you've used is also an important factor. If you've only had one type of loan, your score will be lower than if you've utilized auto loans, mortgages, credit cards, and student loans (and paid them all on time, of course). The number of credit cards you have is factored into your score, but plays a very small role compared to the other factors above.

Sometimes opening a new credit card does as much good for others as it does for yourself. With the biodegradable Sustain:Green MasterCard, you can calculate your carbon footprint and make sure that every purchase you make is good not only for yourself, but also creates a benefit for the environment as well. Contact us today to learn more about how the biodegradable Sustain:Green MasterCard® fights climate change by reducing your carbon footprint and funding rainforest preservation projects.

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