Will multiple cards build credit score faster?

YouCantParkHere

Hi all,


Somewhat new to the world of lending and finance. I am a full time student who applied for their first credit card this time last year with Tesco and was successful, the initial limit was 200 but since then they have upped me to 1,200. Each time they approached me with the increase and I did not request it. I only use the card in Tesco and pay off the total each month.

For everything else I use my debit card and I am thinking of replacing all purchases on that with a credit card, either another one or my existing Tesco card. I am trying to build credit as much as possible if/when the day comes I need a large loan such as a mortgage, I'm unsure if two different credit cards affect this, or the total number of uses, or if it's simply if my monthly payments are made on time that factor into it.

My question is, does it make a difference in regards to building credit if I have multiple cards? I have been shopping around and almost all eligibility checker tools decline me due to what I assume is income, I do have savings but on the tools where I can enter this it doesn't seem to make a difference. I don't want to make an official application, have it declined then have that appear on my credit report. Should I just use my current Tesco card for all purchases and put the debit card on the shelf?

eskbanker

As I understand it, credit risk assessments by prospective lenders will typically consider total debts, credit limits and usage, so splitting these across multiple cards is unlikely to make any difference.  If you increase your spend on the existing card then chances are that you'll continue to be offered limit increases, and if you continue to repay in full then this should be seen positively by future lenders.

[Deleted User]

Probably not, as scores hate change, but that's not the issue. It's about building credit history.

Multiple cards can build a more solid credit history and shows that more than one lender trusts you. As you only have one low limit card, it would be worth getting another, with a view to having three or four in due course, but you need to take it steady.

Declines don't show on your credit files, just searches. A couple of searches will do no harm.  Savings aren't taken into account for credit, as you could spend those tomorrow, or even have borrowed them from a friend.

No matter how many cards you have, make sure you clear them in full each month.

Dandytf

OP

Multi cards are fine up to a point.
I've gone up to 23k available across a few cards during 2021.
This year I no longer qualify for another application, which is fine.

I don't believe multi cards would build your rating any faster than managing to use and repay one card over a number of months/years.

thanks

Alex9384

Not faster but I believe it's better.
With more well managed cards you are demonstrating that you can handle multiple lines of credit responsibly and you are trusted by multiple lenders, as well as trusting yourself.

adamp87

Adding to your existing available credit with another lender may show other lenders you are more trustworthy if they are managed well.

But I wouldn’t rush out to try and get credit time does the job enough with one card at the moment I’d say in your position.

Dont focus on improving a marketing gimmick either, your credit report & history do the work, not the score.

Fighter1986

So it's all a bit nuanced, as others have alluded to.

In the short term, a new card will have a detrimental effect on your creditworthiness as one of the factors that plays into credit scoring is stability - including the average age of your accounts.

Whatever you do in the future, leave your oldest credit card open - as having a long standing account, even if unused, will help the algorithm perceive you as stable.

Opening a new account can be a wise choice in the long term if it overall decreases your utilization ratio, without compromising affordability calculations. 

Another big factor in credit scoring is "debt stress" - having a couple of credit cards, one or more of which is unused shows you aren't experiencing any debt stress, whereas having a balance on all of your lines of credit can be interpreted by some scoring models as a sign of debt stress.

So I make this suggestion:

By all means, open another credit card, try to only have a balance on one of the cards at a time, and keep your balance below 33% of your limit on each card when you do use it. 

You'll see a healthy improvement to your creditworthiness after six months and again after twelve months - when it comes to the "Stability" part of most credit scoring algorithms the optimal place to be in is to have no accounts under twelve months old. 

Ebe_Scrooge

Fighter1986 said:

By all means, open another credit card, try to only have a balance on one of the cards at a time, and keep your balance below 33% of your limit on each card when you do use it.

This is not quite correct.  Percentage utilisation is much-hyped by the CRAs, but actually matters not one jot - so long as you're clearing the balance every month.  Likewise your statement about only having a balance on one card at a time - there's no reason at all to do this.

The main thing is to use your cards regularly and always pay them in full every month.  If you're not clearing them in full then yes, the utilisation comes into play.  But this really should be avoided at all costs - not only will you be paying interest, but it's a less-than-favourable data point on your credit history.

Dandytf

In my experience I've not seen much effect from utilisation.
Though keep minimum is sensible if not clearing every card each month.

Here's my cra 'recommendation's'  

Experian <25%

Clearscore <30%

R.B.S. <50%

Though as mser's advise, not sure if these percentages mean anything if exceeded.
What I do understand is any more additional products are going to be limited if at all.. 

ferreroreeses

I've personally stuck to 2 and made sure I haven't gone over the total credit limit by more than 10-20%. I think the time you've had the credit cards for makes a big difference. For example if you've had a card for 6 years and you take out a new one, the average time you've had both contributes to your credit score. In this example the average time would be 3 years (6 + 0 / 2).

Fighter1986

Ebe_Scrooge said:

Fighter1986 said:

By all means, open another credit card, try to only have a balance on one of the cards at a time, and keep your balance below 33% of your limit on each card when you do use it.

This is not quite correct.  Percentage utilisation is much-hyped by the CRAs, but actually matters not one jot - so long as you're clearing the balance every month.  Likewise your statement about only having a balance on one card at a time - there's no reason at all to do this.

The main thing is to use your cards regularly and always pay them in full every month.  If you're not clearing them in full then yes, the utilisation comes into play.  But this really should be avoided at all costs - not only will you be paying interest, but it's a less-than-favourable data point on your credit history.

No it really does matter especially if not clearing in full each month, which there are plenty of legitimate reasons for (interest free spending / balance transfer / money transfer / slow stooze).

Utilisation percentage is the most obvious sign of debt stress and absolutely make a huge difference in a number of credit scoring models.

I pay all my cards in full each month and notice a big difference when it comes to pre approved offers if my utilisation rate gets too high.

I've literally been told by an MBNA underwriter back before they were Lloyds Banking Group that the only reason they weren't giving me a card was because my utilisation of other cards was over 66%. This was back in 2007 before the big credit crunch so if lenders were applying that metric before the bubble burst I'm certain they will be today also.