Will Too Many Credit Cards Hurt Your Credit? Here’s what Dave Ramsey says

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You’ll want to be careful when opening credit cards – that means not overdoing the number you keep.


Key points

  • Multiple credit cards could help you build credit.
  • But if you’re not careful, the opposite could happen.
  • Be careful not to open too many cards to handle comfortably.

Having good credit is important. The higher your credit score, the easier it becomes to borrow money at an affordable rate when you need it. This can be very useful when the time comes to take out a mortgage or car loan.

Now, one way to build credit is to establish a payment history that allows you to consistently pay your bills on time. And so if you have a credit card that you manage to always pay on time and in full, it could boost your credit score.

But it’s important to be careful not to open too many credit cards. Going this route could actually hurt your credit. In fact, financial expert Dave Ramsey says your best bet is actually to have no credit card at all. But if you’re going to open credit cards, he advises to keep it to a minimum.

A moving target

Your credit score can change over time, and your financial behavior can cause it to go up or down. One thing you could be doing that is impacting your credit score is applying for too many new credit cards in a short period of time.

Every time you apply for a credit card or loan, a thorough investigation is made of your credit report. A single serious request will generally result in a five to 10 point drop in your credit rating, which is not catastrophic, especially if your rating is good to begin with.

But think what might happen if you applied for four credit cards in a few months. At this point, you might be looking at a 20-40 point hit. It’s more meaningful.

That’s just one reason Ramsey warns against having too many credit cards. Another reason is that the more credit cards you have, the higher your total spending limit. This could open the door to out-of-control spending, which could not only leave you with costly debt, but also do significant damage to your credit score.

Another important factor that goes into calculating your credit score is your credit utilization rate. This ratio measures the amount of credit you use compared to your total spending limit on your credit cards. The higher this ratio, the more your credit score could take a hit. And so Ramsey says that opening more cards could increase that ratio.

Interestingly, opening more credit cards could also have the opposite effect. If you add a few more cards to your personal mix but don’t charge spend on them, you could lower your credit utilization rate by increasing your total spend limit. But Ramsey doesn’t tend to see it that way and thinks fewer credit cards are better. (In fact, he thinks it’s better not to have cards.)

How many credit cards should you have?

There is no single answer to this question. But a good rule to follow is to open only the credit cards you need.

If you need an everyday card and a travel rewards card, go with the latter if you can manage your spending well on both accounts. If you want a third card to give you more buying power, do so as long as you don’t bill more in any given month than you can pay off by the time your bills come due.

More credit cards won’t necessarily hurt your credit, but it might. And it’s a situation that Ramsey is doing everything possible to help consumers avoid.

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