Credit Cards

You may want to know the perfect number of credit cards that you should have, but there is no ideal number. FICO has done a recent analysis of individuals with excellent credit scores over 800 (with 750 to 850 being considered the excellent category). 

They found that these people have three open credit cards on average.

You should not be quick to close an account as this will reduce the total amount of credit that you have and could increase your debt to limit ratio at the same time. Both of these factors negatively affect your credit score. Open, inactive accounts do not hurt your score, but they can help it to be higher as they increase the total available credit that you have. 

Opening a new credit card is a method for increasing your available credit. 

Doing so permits you to charge more while still keeping a safe ratio of credit utilization. The lower your balance ratio is to your total available credit limit, the better off your score will be. 

You should seek to maintain a utilization ratio that is under 30 percent. It is easy for you to figure out this ratio by totalling up your balances on all credit cards that you have and then dividing this by the total limits of all your cards.

As an example, if you have a balance of $250 on a credit limit that totals $1,000, then your utilization ratio would be 25 percent. 

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