How many cards is bad?

thewinkshow

How many credit cards is bad - and what percentage of used credit do they like to see?
How far apart should you spread applications ?

And how many per year do they expect you to make withou looking excessive .

Do they know if you got rejected or not. -or just that a check was done by a credit company ?

iamana1ias

All covered by Martin's credit card article.

BugsyBrowne

thewinkshow wrote: »

How many credit cards is bad - and what percentage of used credit do they like to see?
How far apart should you spread applications ?

And how many per year do they expect you to make withou looking excessive .

Do they know if you got rejected or not. -or just that a check was done by a credit company ?

I don't think their is an exact limit as they want to see how you are managing each individual account.
Obviously if you have 5 credit cards and you are using 90% of your credit limit on all cards then this will show that you are not in control as such with your finance's.

bit_2

I got 6 credit cards, but I pay the money back on time to boost my credits.

izools

bit wrote: »

I got 6 credit cards, but I pay the money back on time to boost my credits.

This might not "boost your credits" if the cumulative limits are too high. It's not as simple as that.

Having six cards, which have been open for under a year with high limits will have a highly detrimental effect on your credit score whereas six cards which have all been opened for many years, and have cumulative limits of about 25% of your salary, will have a positive effect.

Conversely holding two credit cards which you've just opened and have high limits is also bad; if they have lower limits and have been open much longer again this is good.

So there is no one-rule-fits-all answer to "how many credit cards is too many" - it's more complicated than that.

Then we have to consider Debt to Limit ratios as well as debt to income and limit to income but I CBA to go into that right now...

lisyloo

How many credit cards is bad - and what percentage of used credit do they like to see?
How far apart should you spread applications ?

And how many per year do they expect you to make withou looking excessive .

Do they know if you got rejected or not. -or just that a check was done by a credit company ?

No-one can give you exact answers as each lender has their own criteria.
There are many people with 4-6 cards which doesn't seem to be an issue IF you have income and good history.

Generally more than 1 application per month is considered bad.

No they don't know you were rejected. But it doesn't take a genius to work out that search with NO accompanying credit account probably means you didn't get it.

izools

lisyloo wrote: »

But it doesn't take a genius to work out that search with NO accompanying credit account probably means you didn't get it.

Any credit scoring model that makes this assumption would be doing so in breach of the data protection act. Assumptions are not legal, only taking cold hard provable facts into account.

The search may not be accompanied by an agreement if:

1. The agreement is yet to appear (can take upto three months)
2. The agreement is not reported to that paticular credit reference agency (i.e. Sygma Bank don't report to Call Credit, Provident don't report to Equifax, Virgin Media don't report to EX or CC, just EQ)
3. The agreement is credit scored, but not credit reported (British Telecom, Computeach distance learning, EON)

Ergo no creditor can assume a lack of agreement = failed application.

chexum

izools wrote: »

Any credit scoring model that makes this assumption would be doing so in breach of the data protection act. Assumptions are not legal, only taking cold hard provable facts into account.

Yes, but then again, any scoring model that's based on the statistics whether there's a higher risk when the customer made a search just the same day is perfectly fine then, right?

*I* would not be able to decide which is more likely (did the customer get the other account in the end), but they surely have more historic information to work with...

izools

chexum wrote: »

Yes, but then again, any scoring model that's based on the statistics whether there's a higher risk when the customer made a search just the same day is perfectly fine then, right?

*I* would not be able to decide which is more likely (did the customer get the other account in the end), but they surely have more historic information to work with...

Well now a scoring model that thinks to itself "an applicant that has just applied elsewhere is more of a risk than applicant who hasn't" is basing it's scoring on fact - "that the applicant has applied elsewhere" - and not an assumption -" that the applicant has just been rejected elsewhere".

And a customer who is not overly keen to take out credit is more likely to be in a stable financial position and be able to pay on time every time.

The applicant who applies for two or three cards in one day obviously has a financial situation on the horizon that they've either not planned for, or haven't accounted for -

so yes, they will be a higher risk than the applicant who isn't bothered if they get approved or declined and goes away for a few months before trying again - because they have other ways and means of dealing with whatever financial situation prompted them to apply in the first place