The Disadvantage of Too Much Credit

Of the many business myths which have bad advice associated with them, one of the most prominent has to do with Credit Cards. In fact, it used to be advised that it was good to have a lot of credit cards and to carry a balance on almost all of them. But this simply is not true.

In fact, having too many credit lines available to you can hurt you. You are considered a higher risk to lenders if you decided to get crazy with your cards and charge up a storm. Another consideration is that if you have a card and do not use it, then there is nothing for the creditor to evaluate.

Much better advice would be to keep only one or two cards and pay them off quickly. If you're trying to re-establish credit, you'll be more attractive to creditors if you have a major credit card, such as MasterCard or Visa. If you don't qualify, get a "secured card." These generally require you to keep $250 to $1000 on deposit, and then you can usually charge up to that amount. Many creditors will let you convert to a regular card after 18 to 24 months if you have a good repayment record. However, they will be cautious, in allowing only a very small credit line and probably one of the highest interest rates available.

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