Credit cards have made life easier, allowing quick payments whether you’re shopping online or in a store. It’s common to have multiple credit cards, helping you manage expenses and payments. But what about your credit score in India? Is having many credit cards good or bad, or does it not matter? Let’s find out.
Here’s How Multiple Credit Cards Affect Your CIBIL Score
How you use your credit card affects your credit score. If you regularly fail to pay on time, your score may drop. On the flip side, consistently paying on time can improve your credit score. But what about using multiple credit cards at the same time? Let’s find out how that impacts your credit score.
Your payment history, especially with credit cards, plays a big role in your credit rating. Even a small delay in paying off your credit card dues can be reported to credit bureaus. To keep a good credit score, make sure to pay your credit card bills regularly and on time. Using more than one card isn’t a problem as long as you stay aware of the due dates and make timely payments for each one.
Debt-to-Credit Ratio or Credit Utilization
Your credit rating takes into account your debt-to-credit ratio, which compares your outstanding debt to the credit available to you. If this ratio goes beyond 30%, it can harm your credit score. Having multiple credit cards initially helps as they increase your available credit. However, to maintain a good credit score, it’s crucial to make sure your credit utilization ratio stays below 30%.
New Credit Accounts
Getting a new credit card affects your credit score a bit because it adds to the credit risk. If you end up with many credit cards, it can lower your credit score. So, it’s wise to go for new credit cards gradually, giving your credit score time to bounce back.
Type of Credit
Having only one type of credit can be bad for your credit score. It’s a good idea to mix it up with different types like mortgages or auto loans. If you already have a mix, adding more credit cards won’t hurt your score. But if your credit portfolio is mainly credit cards, each new card might have a negative impact. So, it’s smart to have a variety of credits to keep your financial profile in good shape.