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Should You Take On More Credit Accounts During Credit Repair?

Here’s a question you don’t normally come across when trying to improve your credit: Is there such a thing as having too much credit?  In other words, will taking on more lines of credit than you already have actually damage your credit score, or will it damage your chances at credit repair?

Well, assuming you already have a good credit rating going for you, you won’t really be doing any long-term harm to your credit history by taking on more new accounts.  Just make sure you take care of those new accounts as well as your old ones, or it’ll come back to haunt you later…

How it’s done

If you already have a good credit score, it shows your lenders that you know how to handle your credit accounts.  You pay your bills on time, you have more than one type of open credit account in your history, and your open accounts all have good payment history on your profile.  In short, your lenders see that you aren’t a high-risk case for paying money back, and so will gladly extend you a new line of credit.

But just because you can pick up new credit so easily doesn’t mean you should just rest on it.  Although the new line of credit, be it a card or otherwise, will help boost your good history, your score will likely be dinged a couple of points initially due to the “hard inquiry” the creditor makes into your credit history.  Your credit utilization ratio will be affected as well, which is why you’d do well to stay away from applying for cards you might only end up using once, then calling it a day.

Be sure to keep an eye on your debt-to-income ratio as well.  The more new lines of credit you open, the higher your limits raise, which could lead to trouble if you’re prone to impulse shopping like I am.  Always try and maintain your balance at 30% of the total available high balance to hold onto the best credit score possible.

You need a high limit to work

There’s also a possibility that your higher limits could work in your favor right from the get-go.  In addition to raising your overall credit limit, lenders – who were once pretty wary of anyone with too high a credit limit – are instead focusing more on a potential consumer’s credit utilization rate.  The more you show that you not only have high credit, but know how to use it as well, the better your chances of being extended more credit will be.

Just make sure you don’t take on any more credit than you can realistically handle.  You’ll need to keep a good handle on your overall debt as well.  Any new lines of credit will need to be watched closely so your debt doesn’t rise too high and start to impact your credit score, leaving you further in need of debt relief.  Be sure to check each potential new card’s policies and interest rates before you sign the dotted line, and make sure they won’t drown you in interest the minute you miss a payment.