Adding credit cards may lift credit score
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As credit has become more difficult to come by and consumers look at ways to improve their credit scores, it appears as if the conventional wisdom about limiting your number of credit cards might not be important after all.
"What we found is pretty interesting," said Ken Lin, CEO of CreditKarma.com, a San Francisco-based consumer credit company. "The more credit cards you have, the better your credit score.
"A lot of consumers think that having fewer credit cards is better for your credit score. Our data show that is false."
Weighing the data inside the credit reports of its 3 million members, CreditKarma.com found the average credit score for people with one credit card was 618 while those with six credit cards had an average score of 692 and those with 10 cards averaged 701.
The disparity in scores often comes down to the difference between credit and debt. While having lots of debt is a bad thing, someone with lots of available credit gets a higher credit rating.
Amber Stubbs, managing editor for CardRatings.com, said there were too many variables to draw any clear conclusions from the study.
For example, many of the consumers in the data set who had only one card might have had credit for only a short period of time whereas those with multiple credit cards might have 10 years of credit history. That would impact their credit score significantly, she said.
"Having multiple cards can help or hurt your credit score depending on the situation," she said. "If you have one credit card that you've had and suddenly apply for four new cards at once, then you can expect those new accounts to have an adverse effect on your credit score for at least the short-term.
First Published July 1, 2011 12:00 am
