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The way you use credit impacts your credit score

You might think that too many credit cards is bad for your credit score, but that isn't necessarily the case. Your credit score -- and usually your debt load -- often depends more on how you use the credit you have than how much credit is available. In fact, the credit reporting agencies base a lot on how much of your credit you've used -- the estimates are that it accounts for 30 percent or more of your score.

What does that mean for credit card users? First, it means that more credit card accounts don't necessarily mean a higher credit score. If you have one or two reputable credit card accounts and you pay them off regularly and keep away from your credit limit, that is likely to boost your score.

At the same time, numerous credit card accounts won't necessarily drop your score as long as you follow the same protocols. You have to keep your balances well below the credit limits and make regular, timely payments on your accounts. If you have one or more credit card accounts and you max them out, it's usually a negative impact on your credit score.

Some people eschew credit cards altogether, thinking that will solve any credit score problems, but that won't work for everyone. Sometimes, too, a card on hand for emergencies can be a great benefit.

If you find yourself maxing out credit cards repeatedly or playing an endless shuffle with credit card balances, then credit cards might not be the right choice for your lifestyle at this time. You might also want to consider whether you are living in a debt crisis situation and whether speaking to someone about bankruptcy might be a good idea.

Source: Credit.com, "How Many Credit Cards Is Too Many?," Jill Krasny, Sep. 21, 2016

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Joshua Z. Goldblum, Attorney at Law
826 Bustleton Pike Suite 101B
Feasterville, PA 19053

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