I have been told that building up a credit before getting out of college is a good idea. Currently, I have one credit card and from two years of use I’ve managed to build up a pretty good credit. I’d like to not take on more than I need but I have been also told that its best to have more than one credit card. Is there any particular reason as to why?

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Posted by Emma He (MONEY FORUMS: 4, Answers: 5)
Asked on February 10, 2016 6:25 pm
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Hi Emma, I have just one credit card and it doesn’t even have that high of a limit. I simply pay for one bill a month, and use it to pay for rental vehicles. I have maintained a 750+ credit score with that single debt product.

The reason that more credit cards or higher limits raises your credit score is because about 15% of your FICO score is credit utilization. This means the amount you owe on your cards divided by the amount of credit avaiable to you. As a rule of thumb, you want to have your credit limit high enough so that no single debt product has a utilization above 15% (and your cummulative utilizaiton is below 15% too).

So if you have a low credit limit (Say $3K), and you spend $600 on your credit card each month, even if you pay off the balance in full each month, you could probably stand to get a second card and put $300 on each card instead. Or you could pay off your credit card more than once a month, or you could use a debit card.

Once you have a good credit score, there’s really no reason to be concerned about making it better.

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Posted by Hannah Rounds (MONEY FORUMS: 1, Answers: 54)
Answered: February 11, 2016 8:20 pm
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If your credit score is already high Emma (over 720 or 750), you don’t need a second or third card for your credit history/score. Personally, I use different cards for different reasons, they may have different perks and different due dates, and I use different cards for different elements of my budget. But that certainly is not necessary. I might suggest adding a second card for security purposes…use one card for online transactions, and one for in-person transactions. If you have 2 cards and one is compromised due to fraud, you have another card you can use while waiting for resolution.

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Posted by Beth Tallman (MONEY FORUMS: 1, Answers: 61)
Answered: February 10, 2016 6:49 pm