Picture this: You’re at the checkout counter, ready to make a purchase, when the cashier asks, “Which credit card would you like to use today?” If you’re like many people, you might hesitate, wondering if having multiple credit cards is beneficial. Well, I’m here to tell you that not only is it okay to have more than one credit card, but you can actually improve your credit score with credit cards! Let’s dive in and explore how.
Understanding Credit Utilisation Ratio
One of the key factors that influence your credit score is your credit utilisation ratio. This is the amount of credit you’re using compared to your total credit limit. For example, if you have a credit card with a ₹50,000 limit and you’ve spent ₹10,000, your credit utilisation for that card is 20%.
Now, here’s where the benefits of having multiple credit cards come into play. Let’s say you have three credit cards, each with a ₹50,000 limit. If you spend ₹10,000 on each card, your total credit utilisation is still 20% (₹30,000 out of ₹150,000). However, if you had just one card with a ₹50,000 limit and spent ₹30,000, your credit utilisation would be a whopping 60%!
| Number of Credit Cards | Total Credit Limit | Total Spending | Credit Utilisation |
| 1 | ₹50,000 | ₹30,000 | 60% |
| 3 | ₹150,000 | ₹30,000 | 20% |
As a general rule of thumb, it’s best to keep your credit utilisation below 30%. Having multiple credit cards can benefit you by spreading your expenses across different cards, thus keeping your utilisation low on each one.
Diversifying Your Credit Mix
Another factor that affects your credit score is your credit mix. This refers to the different types of credit accounts you have, such as credit cards, personal loans, home loans, etc. Having a diverse credit mix shows lenders that you can handle various types of credit responsibly.
While having multiple credit cards doesn’t directly improve your credit mix, it does demonstrate your ability to manage revolving credit. When combined with other types of credit, like a personal loan from Airtel Finance, it can help create a well-rounded credit profile.
Building a Longer Credit History
The length of your credit history also plays a role in your credit score. The longer you’ve had credit accounts open and in good standing, the better it is for your score. By having multiple credit cards and keeping them active over time, you can establish a lengthy credit history that showcases your responsible credit management.
For example, let’s say you opened your first credit card when you were 20 years old. Ten years later, you decide to apply for a credit card from Airtel Finance. Because you’ve maintained a long-standing relationship with your first credit card, it can help boost your overall credit history length.
Maximising Rewards and Benefits
Apart from improving your credit score, having multiple credit cards can also help you maximise rewards and benefits. Different cards offer various perks, such as cashback, travel miles, or discounts at specific retailers. By strategically using the right card for each purchase, you can earn more rewards and save money in the long run.
For instance, you might have one card that offers 5% cashback on groceries and another that gives you 3% back on fuel purchases. By using the appropriate card for each transaction, you can optimise your rewards earnings.
Tips for Managing Multiple Credit Cards
While having multiple credit cards can be beneficial, it’s crucial to manage them responsibly. Here are some tips to help you stay on top of your credit game:
- Pay your bills on time: Late payments on credit cards can hurt your credit score, so make sure to pay all your credit card bills before the due date. Consider setting up automatic payments to avoid missing any deadlines.
- Keep your balances low: As mentioned earlier, aim to keep your credit utilisation below 30% on each card. This shows lenders that you’re not overly reliant on credit and can manage your finances well.
- Avoid applying for too many cards at once: While having multiple credit cards has its benefits, applying for too many in a short period can raise red flags for lenders. Space out your applications and only apply for cards that genuinely benefit you.
- Monitor your credit score regularly: Keep an eye on your credit score using the free credit score check by Airtel Finance. This will help you track your progress and identify any potential issues early on.
Summing Up
In conclusion, having multiple credit cards can be a smart financial move when managed responsibly. Credit cards improve your credit score by lowering your credit utilisation, diversifying your credit mix, and building a longer credit history. Plus, you can enjoy various rewards and benefits that suit your lifestyle.
Remember, the key is to use your credit cards wisely and pay your bills on time. By doing so, you’ll be well on your way to a healthier credit score and a brighter financial future. If you’re looking for a reliable credit card option, be sure to check out credit card offerings by Airtel Finance for a seamless and rewarding experience.
FAQs
- How many credit cards should I have to improve my credit score?
There is no magic number, but having 2 to 3 credit cards can help diversify your credit mix and improve your credit utilisation ratio. Focus on managing them responsibly.
- Will applying for multiple credit cards hurt my credit score?
Each credit card application triggers a hard inquiry on your credit report, which can temporarily lower your score. Space out your applications and only apply for cards you genuinely need.
- Can I improve my credit score with just one credit card?
Yes, you can improve your credit score with a single credit card by making on-time payments, keeping your utilisation low, and maintaining a long credit history. However, having multiple cards can provide additional benefits.
- What should I do if I have trouble managing multiple credit cards?
If you find it challenging to keep track of multiple due dates and balances, consider consolidating your debt with a personal loan from Airtel Finance. This can simplify your payments and potentially lower your interest rates.
- How can I check my credit score for free?
You can check your credit score for free through the Airtel Thanks app or by visiting the credit score page on Airtel Finance. Monitoring your score regularly can help you track your progress and identify areas for improvement.
