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I get the same exact question nearly everytime I discuss my credit card obsession with someone unfamiliar with the miles & points hobby. They ask “doesn’t having too many credit cards hurt your credit score?” My response is always no. And then I explain how I have 15 travel credit cards and an 835 FICO score.
Here’s the secret – if you use credit cards responsibly (i.e. never carry a balance and are diligent with managing your cards), then applying for the best travel credit cards can actually get you FREE travel or piles of cash back! I’m talking about $1,000s worth of rewards! For example, my wife and I recently took a First Class trip to Hong Kong and stayed for free at The Ritz-Carlton. The retail value of this trip was more than $35,000, but we paid just $184 out-of-pocket by redeeming credit card reward. Our blog is full of similar success stories from team members and readers.
Here’s another insider tip – having several open credit cards can actually help IMPROVE your credit score. The trick is to NOT utilize a large portion of the credit limit on all of your cards. Besides an excellent payment history, an important factor (30% of your credit score) is your credit utilization ratio. That’s the total balance reported to the credit bureaus divided by the total available credit limit across your credit card accounts.
So if you only have 1 or 2 cards with a relatively low credit limit, you could actually be negatively impacting your credit score, even if you pay your balance in full each month. I wrote how this caused my friend’s credit score to drop by 30 points.
When I started in the miles & points hobby ~5 years ago, I had a ~750 FICO score, which is considered excellent. But after opening up more than a dozen new cards, I’m close to a perfect FICO score of 850!
This doesn’t mean you should apply for 10 new credit cards today. Each time you apply for a credit card, the banks look at your credit report. This is known as a “hard” credit inquiry. And hard inquiries will have a minor impact on your credit score. But in my experience, the temporary impact of applying for 1 or 2 new cards is usually offset by the long-term benefit of maintaining a low credit utilization ratio.
If I was just getting started in the miles & points hobby in 2019, I’d start by applying for the Chase Sapphire Preferred® Card. This is the top card we recommend to folks who are new to miles & points. You can use the valuable sign-up bonus to save on airfare, hotels, or rental cars! Here’s our full review of the Sapphire Preferred offer.
If the miles & points hobby has helped your credit score, let me know in the comments below!