Bad Credit Loans :: News

Given the current economic circumstances, it’s no wonder that you’re eyeing your credit card with a little hesitancy right now.  After all, a large credit card balance can do more to destroy your credit score, sap your finances and prove to lenders that you’re not a creditworthy consumer that can take advantage of loans at historically low interest rates.  So if you’re considering keeping only one credit card for emergencies – or none at all – then you might think that you’re justified in your actions.

However, completely abandoning your plastic – even if you only keep one card for emergencies – is the best way to damage your credit score and miss out on great loans, even if you have a stellar history of paying bills on time and are an otherwise financially responsible consumer. 

So is there a magic number of credit cards that you should have?  And if so, what’s the secret number?

Unfortunately, there’s no one number that financial experts can agree on, as it all boils down to the financial responsibility of the person in question.  In other words, the right number of credit cards for you depends on how many you can best manage.  While many consumers think that owning multiple lines of credit can damage their credit scores, it’s important to make the distinction between the short-term and long-term effects that opening a new account can have.  While your credit score will lower about five points when you open a new card, you can actually increase your credit score over time if you keep the balance at zero.  Since a large part of your credit score is determined by your credit available to debt ratio, the more available credit you have, the better your score will be.

Additionally, it’s important not to ignore the peace of mind that owning a couple of credit cards can give to a person, especially should it boil down to a financial emergency.  Should your wallet or purse be stolen, a credit card stored at home can provide you with financial means while you recover your stolen cards.  Let’s not forget that online shoppers can take comfort in using a credit card, as lenders will easily dismiss any unauthorized charges made on your account.  Unfortunately, debit cards just don’t operate the same way.

Of course, there are fun aspects to owning a credit card, and this includes all of the rewards that you can accrue through responsible use.  While credit cards with expensive perks like frequent flier miles and other rewards can cost you more money in the long run, owning a credit card with a cash-back policy can do more for your bank account than any other credit card.  The key is to pay off the balance before you get billed, as you could be hit with higher interest rates (thanks to the consequences of the credit crisis). 

As you can see, owning multiple credit cards carries plenty of benefits – the key is to owe the number that’s comfortable for you!