Is there such a thing as too much credit?

Many consumers have had struggles with credit cards in the past, and some may have needed significant credit help to get themselves back on sound financial footing. But experts say other consumers have the opposite problem: They might be carrying what some call "too much credit."

Most studies show that the average American has between three or four credit cards in his or her name, but there are some consumers that are well above that number, according to a report from Reuters. There is now a growing trend among consumers to sign up for a large number of rewards credit cards – sometimes as many as a few dozen – in an attempt to simply obtain the generous introductory benefits being offered.

Often, these introductory rewards will be worth a few hundred dollars in points, miles or cash back, and while the total value of these offers can add up quickly for many consumers, some experts worry about whether these borrowers are going overboard in pursuit of a number of good deals, the report said. Strictly speaking, though, there's no such thing as having too many credit cards, at least as far as affecting a borrowers' credit rating.

"You can't have 'too much credit,' but you can utilize too much credit," Anthony Sprauve, a spokesman for FICO, told the news agency. "Credit utilization (amounts owed as a percentage of available credit) counts for 30 percent of a person's credit score. The more of someone's available credit they are using the bigger negative impact on their credit score."

Is there a downside?

While having a multitude of credit cards, regardless of the type of account, isn't going to take a chunk out of a borrower's credit score, the report said. And as such, even when applying for significant lines of credit like mortgages or auto loans, there isn't likely to be resistance from lenders. Some may find it curious that an applicant has five, 10, or even more credit cards, and may ask about why the person has that many, but it's not seen as a sign of financial trouble or weak borrowing habits as long as the accounts are all up to date and not approaching being maxed out.

The issue for many consumers who obtain a large number of cards is one of making sure they're keeping track of their spending on all the various accounts, and keeping the cards open and active by using them a few times a year, the report said. Further, when dealing with that many cards, experts say it can obviously be somewhat difficult to make sure all their bills are paid on time and in full. However, simply having a large number of cards isn't, in and of itself, a bad thing.

The one thing consumers should be cautious of is making their payments on time, as this is the most important factor in determining a credit score. Missing one payment by a single day can have a significant negative impact on a rating.

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