How many lines of credit should I have?
There’s no hard-and-fast rule about the number of lines of credit (LOCs) a person should have.
What you’ll learn:
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The number of LOCs you should have can depend on factors like your spending habits, income and ability to manage multiple payments.
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If your application incurs a hard inquiry or opening a new LOC decreases the average age of your credit accounts, you may experience a drop in your credit scores.
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Having and responsibly using one or more LOCs could help you boost your credit scores over time.
Should you have multiple lines of credit?
It’s up to you to decide how many lines of credit you’d like. But keep in mind that it’s the lender who decides how many lines of credit you can actually have. Here are some factors that can help you determine what’s right for you.
Your spending and repayment habits
When you use credit responsibly, having more than one line of credit can be a positive thing. Combining different types of LOCs, such as a home equity line of credit (HELOC) and a personal line of credit (PLOC), for example, can give you more available credit and offer more spending flexibility. But each LOC is a separate account with different payment dates and borrowing terms to manage.
Your income or debt-to-income ratio
Can your income support additional debt? Your debt-to-income (DTI) ratio represents how much of your monthly income is owed toward debt payments. You can calculate yours by dividing total monthly debt payments by gross monthly income.
Impact on your credit scores
Opening each new account could cause a temporary dip in your credit scores if the application triggers a hard inquiry. And opening a new line of credit may decrease the average age of your credit history, which can also have a negative impact on your credit scores. But with responsible use, such as always making payments on time, an extra LOC could help your credit scores.
Multiple lines of credit FAQ
Still wondering how many lines of credit you should have? Take a look at these frequently asked questions.
How many lines of credit are too many?
Just as there’s no fixed rule about how many lines of credit are ideal, there’s no rule about how many lines of credit are too many for one person to have. It all depends on your situation. You can consider whether you’ll be able to make the payments and handle any associated fees or if it would put too much strain on your finances.
Is it good to have multiple lines of credit?
Having multiple lines of credit could be good or bad depending on your situation. They could help you cover necessary expenses, and if used responsibly, they might even have a positive impact on your credit scores.
But opening new lines of credit could also lower the average age of your accounts. And if you miss payments, that could hurt your scores too.
Key takeaways: How many lines of credit you should have
It’s up to you to decide how many lines of credit you should have, taking into account factors like income, financial goals and your capacity to manage different accounts.
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