Having multiple credit cards can seem like a smart financial strategy. They provide higher credit limits, reward points, cashback offers, and shopping flexibility. However, if not managed carefully, owning several cards can negatively impact your CIBIL score, which in turn affects your ability to secure loans or new credit.
Here are 5 crucial things to monitor if you hold multiple credit cards:
1. Credit Utilization Ratio
- What it is: The ratio of your total credit used to your total credit limit.
- Why it matters: High utilization (above 30–40%) signals financial stress to lenders.
- Tip: Keep utilization low across all cards, even if you have a high total credit limit.
2. Timely Payments
- What it is: Paying at least the minimum due on your credit card by the due date.
- Why it matters: Late payments are reported to credit bureaus and can sharply reduce your CIBIL score.
- Tip: Set reminders or enable auto-pay for all cards to avoid missed payments.
3. Number of Hard Inquiries
- What it is: Each time you apply for a new credit card or loan, a hard inquiry is recorded.
- Why it matters: Multiple inquiries in a short period can lower your score, signaling high credit demand.
- Tip: Apply for new cards only when necessary and space out applications.
4. Outstanding Balances Across Cards
- What it is: Unpaid balances on one or more cards.
- Why it matters: Carrying high balances can negatively affect credit utilization and debt-to-income ratios.
- Tip: Pay off full balances monthly or at least prioritize high-interest cards.
5. Inactive or Old Cards
- What it is: Cards that you don’t use regularly or accounts that are very new.
- Why it matters:
- Old cards: Increase your average credit age, which improves your score.
- New cards: Reduce the average age, potentially lowering your score.
- Inactive cards: Some banks may close them automatically, affecting your available credit limit.
- Tip: Keep at least a few older cards active with small, periodic transactions.
Key Takeaway
Having multiple credit cards is not inherently bad, but mismanagement can harm your CIBIL score, making loans and new credit approvals more difficult. Regularly monitor:
- Credit utilization
- Payment deadlines
- Hard inquiries
- Outstanding balances
- Activity on old and new cards
By staying on top of these 5 factors, you can enjoy the benefits of multiple credit cards without hurting your creditworthiness.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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