Why Having Multiple Credit Cards Can Affect Your Cibil Score

The banks may offer multiple credit cards to account holders. However, it isn’t always necessary to avail all the facilities merely because you meet the eligibility criteria and various options are available. The decision to take multiple credit cards should depend on one’s financial needs, income, expenditure, goals, managing ability, and other such requirements. There is no one number of multiple credit cards suitable for all users. The impact of poor financial and credit card management is exhibited in CIBIL score, which has a direct and high potential ability to control one’s financial future. People currently holding multiple credit cards are advised to check CIBIL score regularly for further mindful financial management. Taking an online personal loan to manage the finances is also recommended.  

Effect of Multiple Credit Cards Affect the Credit Score

As you check CIBIL score, remember the following effects of owning multiple credit cards on credit score. 

• Challenging Management of Multiple Due Dates

Holding credit cards means paying all the used card’s bills on time, directly increasing the due dates for repayment. The payments tend to be missed or delayed. The reason won’t matter for justification once the habit is reflected on the CIBIL score. The payment history has a direct and large impact on the credit score. 

The people struggling with the stated issue are suggested to change the due dates manually to the most suitable repayment date for them, considering all the factors. It will lead to the payment of all the due bills on a specific or desired day, reducing the chance of missing them. The option for auto-debit is also applicable for better management of credit card due dates. Head on to check CIBIL score to see the improvement. Planning for a loan with an improved CIBIL score, one can also look for an online personal loan. 

• Increased Credit Utilisation

The increase in credit cards also provides more credit. The total credit percentage in use is defined as the credit utilization rate or owed amounts, playing a second important role in credit score. The poor expenditure and high credit utilization rate negatively impact the CIBIL score. The individuals at fault must learn to limit their spending to a maximum of 10% of the total credit limit. They are advised to constantly update themselves and check CIBIL score to see the improvement. 

The impact on CIBIL score makes banks and NBFC considers the candidate high-risk borrowers regardless of their income status and source. The high credit utilization ratio is interpreted as the expenditure of complete income on credit bills leaving you with little money and hence an unreliable candidate. 

• Decrease in Credit History 

The average time length of owing credit defines the credit history. Thus, the oldest credit card of ten years won’t count as ten years of credit history. Rather the average length will be much lower depending on the time of getting a new credit card. And simultaneously will be the credit score. It takes a few months to return the score to normal.

Credit card holders must never close the oldest credit cards as these are the sole contributors to long credit history. In case of no usage of such cards, the inactive status must be changed by adding the small recurring charge on the card and setting up the autopay. Take an online personal loan for improvement in the credit mix, thus using indirect means to improve the score. 

• Increase in Credit Enquiries 

The application for a new credit card is accompanied by hard inquiry, adding to the downfall of credit scores. It makes you an unreliable customer to deal with all due to a simple application of a credit card. The rejection will lead you to further applications and decrease your credit score. The credit score in such a scenario will also increase in a few months, leaving you unable to take an online personal loan for the period. Check CIBIL score to remain updated and get back on the financial track. However, strictly avoid multiple credit applications in a shorter period. 

To Summarise

Applying for credit cards might seem an effortless and optimal solution in different situations. But the decision must be well-thought considering one’s financial status, expenditure, savings, goals, and other needs. The candidate must be ready to face fluctuations in CIBIL score on application and rejection of cards. Planned financial management can help easily track and manage credit scores. An online personal loan is an alternative way to impact the credit score, among other options. Regularly check CIBIL score through the Wishfin app for progress history needed for efficient decisions considering the finances.