In general, having too many credit cards is not a good thing. You have to manage every account and make sure that every bill gets paid on time. There is no real need for a person to have more than 1 or 2 credit cards at a maximum. One might consider getting a Visa, MasterCard, and American Express if a merchant only accepts one type of card.

Every person that has a credit card also has a credit score. A credit score is what lenders use to determine how risky you are to lend money to. You can always take a look at your credit score free of charge on the numerous sites offering that service on the internet. A mortgage company will look at your credit score when determining what interest rate to give you if they decide to provide you with a mortgage. If you get a motor vehicle loan from your local bank, it too will look at your credit score to determine what interest rate to charge.

To improve your credit score, you should focus on the following two things:

1) Pay bills on time.

This is the one that most people already know. Paying your bills on time shows lenders that you are dependable and trustworthy. Late payments negatively affect your credit score. If you have trouble organizing your bills, using a service like mint.com, which automatically logs into your financial accounts and gives you reminders when bills are due.

2) Keep the debt to credit ratio in check

The debt to credit ratio measures how much debt one has compared to available credit. For instance, if I have a $15,000 credit line on my American Express card and have spent $1,500 this month, my debt to credit ratio is 10% ($15,000 divided by $1,500). While the exact methodology for calculating the credit score is not published, many credit experts say that keeping the debt to credit ratio below 50% is essential for having an excellent credit score. While some people shy away from a high credit limit, actually having one but not using it is beneficial to your credit score.

It is essential to maintain a good credit score. However, it is not something to obsess over daily. Just keep paying your bills on time and monitoring your debt to credit ratio, and your credit score should be excellent when it comes time to apply for a loan if the need arises.

Thank you for reading and hope you have a good rest of the day!

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