Ask Money

Worried about a tanking credit score

Chris Farrell Dec 1, 2011

Question: I’ve always paid off my credit cards (3 of them) every month and I have no other debt and I had a great credit score. Recently, I got married. I increased the credit line on one card and I charged a lot of money on two of the cards. One, I basically stopped using, but it is open. I also had a lot of credit checks done as I was applying for financing a car. I leased a car and started renting an apartment. Now, when I started looking for a mileage credit card so my wife and I can better earn miles to travel, I found that my credit score has decreased and my applications are being denied. How can I rebuild my score after all these credit checks. Should I cancel the card I don’t use? Thanks! Adam, Los Angeles, CA

Answer: I wouldn’t be too concerned about your credit score. You have a history of paying your credit card bill on time and over time. It isn’t uncommon for a credit score to take a ding after a flurry of activity. I imagine that things are settling down now that you’re married. You have a car and you’ve moved into an apartment. I would hold off on credit card applications for now and let your score improve as you keep paying the credit card bills on time. 

Now, from your credit score point of view, you wouldn’t close the credit card you don’t use. The reason is that shutting down the account might lower your credit card “utilization rate.” The term captures the calculation of your total credit card balances divided by your total credit card limits. A standard recommendation when it comes to credit scores is to keep the utilization rate around 30 percent or less. 

However, from a personal finance point of view, how many credit cards do you really need? Why keep a credit card you don’t use? I understand why the credit card companies would want you to do that. I don’t see any real benefit to your personal finances carrying plastic you don’t need in your wallet.

How many credit cards is enough? I lean toward one personal card and one business card. It’s part of a much bigger money conversation between you and your wife. I would focus on setting up a good system for managing household finances and then you’ll know how many cards make sense for the two of you. 

Your credit score will do just fine with sound money management practices.

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