Posted on: Apr. 06, 2017 in Uncategorized

When thinking about your credit, you might make a few assumptions. For example, you probably believe that the less you owe, the better. (Correct.) You make all your payments on time to keep yourself in good standing with your lenders. (Also, correct.) You only have one credit card so you can’t get yourself into trouble. (Wait. Hold up. Not so fast.)


Whether you’ve only ever had one card or you closed accounts you’ve paid off thinking it would help your credit score, it’s very likely that having more than one card can actually improve your credit score. It may seem hard to believe, but it’s true. And the reason is simple.

Your credit score is made up of a few different factors. One of the biggest is something called credit utilization ratio. Simply put, this is the percentage of your available credit that you’re actually using. As much as 30% of your credit score can be determined by your utilization ratio, so it’s important to understand it and protect it.

Experts say you should not use more than 30% of your available credit, however, the ideal percentage is more like 10%. This means that if your total available credit is $10,000, you definitely don’t want to use more than $3,000 and should strive to use no more than $1,000.

So how does having another credit card help? Well, let’s say you have a second card with a $5,000 limit. In order to stay below that 30% threshold, you’ll want to use no more than $4,500. This can certainly come in handy if you have some debt you’re paying down or if you need to make a larger purchase but you don’t want to jeopardize your credit score.  

It’s important to remember that having the extra borrowing power doesn’t mean you should use it. If you continue to make purchases that push you over that 30% mark, you’ll negate the purpose of having the higher credit line. Raising up your credit score should remain a top priority, as it can open up additional opportunities for financing larger purchases such as a home or a car.

If you’re ready for a new car but your credit is keeping you from getting approved, CreditYes can help with our bad credit auto loan program! We can match you with a dealership in your area that will be with you ever step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!