Should You Have Lots of Credit Cards In Your Thirties?

You know it’s true: You’ve been tempted by credit card sign up bonuses in the past. And you’ve maybe even signed up for a credit card solely for the sign up bonus… and then canceled it? Or have you been scared that opening up or canceling lots of credit cards in your thirties could hurt your credit score?

There’s a lot of mixed information in this area that might leave you puzzled. Here’s the deal: credit cards can be really helpful and pretty benevolent unless you can’t use them wisely. It’s like anything: if you develop an unhealthy (overspending) addiction, you need to stay away. Otherwise, proceed wisely and happily. There are lots of benefits to having multiple credit cards.

Here are some tips for having various credit cards in your thirties:

  1. Pay your credit cards off in full every month

This is pretty self-explanatory, but the real trick to benefiting from credit cards, and especially from having multiple credit cards, is to make sure you pay the full balance off every month, not just the minimum. If you can’t pay the full balance off every month, stay with fewer credit cards until you can. Sign up bonuses and points aren’t worth the crazy expensive interest charges you’ll have to pay if you rack up debt.

2.  Don’t cancel the random credit cards you opened in your early twenties

Part of your credit score is calculated based on length of credit history. If you cancel the first card you ever opened, you’re shortening your credit history, and this will hurt your credit score. Unless a card has a high annual fee that you don’t want to pay, there’s no reason to cancel. If you don’t want to use the card anymore, pay it off and cut it up.

3. If you’re opening multiple cards for a point bonus, make sure you can meet the minimum spend in the correct amount of time

If there’s an American Airlines card that will give you 50,000 miles when you spend $3,000 in 3 months, make sure, if you get the card, that you’re gonna spend the $3000 in 3 months. I’ve screwed this one up before and have actually forgotten to meet the minimum. Put all your other cards away and solely use that one for awhile. If you can pay major bills, like your rent, on your credit card, you should be able to easily meet the minimum. There are actually services that can help you do this –this one is called Plastiq. Though Plastiq charges a 2.5% service fee, it can be helpful if you need to meet a minimum.

4. If you can meet multiple minimums at once, it’s best to open more than one card on the same day

Even if you have great credit, you’re more likely to get denied for a card if you open a new card every few weeks. I’ve actually opened and been approved for three cards in one day (I’m really good with credit cards and pay them off in full every month). If I’d opened one card and then waited a week to apply for the next card, I would have probably gotten denied. Wait at least 90 days to apply for the next credit card(s).

5. You won’t ruin your credit from having multiple cards

In fact, the opposite is true. Your credit score is partially calculated from something called a debt-to-credit ratio. If you have more credit available, you’ll have a better ratio.

6. You won’t ruin your credit from canceling a card

If a card has a high annual fee and it’s not worth keeping, go ahead and cancel it. Your score will only drop a tiny bit from your lowered debt to credit ratio. And it will come back up again as you continue using your remaining cards wisely. The annual fees aren’t always worth keeping the card. The only exception to this rule is if you cancel your oldest card- that will definitely lower your score more than the others because it will change your length of credit history… as I mentioned above.

There’s a lot more tips for enjoying multiple credit cards safely, but I hope this is helpful! As always, please comment below with any questions you may have! Thanks for reading!

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Credit Card Myths You May Still Believe In Your Thirties

I feel like getting and keeping good credit is something that should be taught in schools. Otherwise you really have to dig to learn the ins and outs of the mysterious FICO score.

Then again, there are many financial topics that should be taught in schools but aren’t.

Sadness.

Just because I’m in my thirties doesn’t mean I was necessarily taught anything about the ins and outs of FICO. Most of my answers have been self taught.

So I’m here with some common credit card myths that I used to believe in the past. The only way to counter the misinformation that abounds about FICO scores is to provide some solid facts. Hope they’re helpful!

1. Applying for Credit Cards majorly damages your credit score

FALSE – Actually, applying for new Credit Cards will likely help your score in the long run because it will lower your debt-to-credit (or credit utilization) ratio and will increase your credit history. Applying for new cards temporarily lowers your credit score- but way less than you may think. The dip will usually be around 5 points. The long term gains you see will likely be much more than that.

2. You must carry a balance on your credit cards to build credit history and increase your score

FALSE- I really used to believe this one and used to wonder what the magic number was- should you carry a 5% balance? 1%? The answer is that you can pay off your cards in full every month and your score will only increase because of your better debt-to credit ratio.

3. Canceling your credit cards is good for your credit score

FALSE – If you’re an out of control spender, financial gurus such as Suze Orman recommend that you cut up your credit cards- but don’t cancel them. Canceling them will lower your all important debt-to-credit ratio, and will likely end up lowering your score. The only time you should cancel a card is when it has an annual fee that you don’t feel is worth paying anymore. It’ll still lower your score a bit, but it may be worth it.

4. Once you have a bad credit score, you can never fix it

FALSE- This is very untrue. Credit scores don’t really reflect how things are today- they’re a collection of happenings over the years. Missed and late payments and other score damagers will actually fall off your report in 7 years! So there’s likely very good FICO news in your future if you got off-track but now are back on.

5. Checking your credit report hurts your score

FALSE- I believed this one forever. But it’s just not true. If you check your own credit, it’s known as a soft inquiry, and doesn’t have ANY effect on your credit score. If someone else (a credit card issuer, lender, etc) checks your credit score, it’s called a hard inquiry, and that affects your credit score. But not by as much as you think (see Myth #1 above).

Hope this was helpful! These are the simplest myths, but I’ll be back with a part 2 very soon 🙂

3d rendering of a credit card cut into pieces

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