Is it a bad thing if I have a high number of credit accounts?

Unfortunately, there is no definitive answer to this. You could in theory have quite a lot of credit accounts; however, the more you have, the harder it becomes to responsibly manage all of them.

At the end of the day, how you manage your credit and your payment history are the most important factors in developing a credit score. If you’re able to handle a good mix of credit types, this will positively influence your score, but if you open too many accounts at once and don’t make your payments on time, this will negatively affect your score.

Is it good to have a mix of credit?

Credit providers like to see people who can responsibly handle a variety of credit types. “Types of credit” is possibly one of the smallest components that are taken into consideration when determining a credit score. However, the ability to responsibly manage different credit will aid your score. If you have a solid history of making on time payments across a variety of credit types, credit providers are likely to view you as a safe bet to loan money to in the future. On the other hand, having a high number of just one credit type can indicate a higher risk.

Are there credit accounts that are a high risk?

When you apply for a new line of credit, a hard enquiry is done by the potential credit provider. This is so that they can gauge whether you are a safe bet to loan money to. If you are applying for multiple credit accounts, this will lower your credit score, as it will appear as through you are in desperate need of credit. The timing of when you apply for different credit will also be a factor in determining your credit score.

Does it matter if I have a high number of certain credit accounts?

Yes, this is a factor when determining your credit score. Having a high number of one type of credit account shows a lack of diversity in your credit mix. If you also open multiple new credit accounts in quick succession, it may indicate that you are possibly biting off more that you can chew.

If I have a good credit mix, is it possible to have too many accounts?

Taking out credit is a responsibility and should only be done if you are able to responsibly manage the repayments. Although there is no hard line on what “too much credit” looks like, the most important thing when it comes to credit is being able to pay all your bills on time. You should not add to your credit mix if it is going to stretch you and credit should only be taken out if it is going to better your life, not make it harder.