Mudra Compass

In the quest for a good credit score, many Indian consumers are tempted to believe a popular myth: the more credit cards you have, the better your credit score. It’s an idea that’s been circulated in personal finance forums, social media reels, and even among peer conversations. But is it actually true? Let’s unravel this myth and explore what really matters when it comes to managing your credit health.

The Appeal of Multiple Credit Cards

The logic behind the myth is simple: more cards equal more credit limit, which could reduce your credit utilisation ratio the amount of credit you use compared to the total limit available. A lower utilisation ratio is indeed one of the key factors in maintaining a healthy credit score.

But the equation isn’t that simple. While credit utilisation matters, so do payment history, credit age, credit mix, and recent credit inquiries. In reality, having too many cards without disciplined usage can actually hurt your score more than help it.

Understanding the Credit Score Formula

Your credit score in India calculated by agencies like CIBIL, Experian, Equifax, and CRIF High Mark is influenced by several weighted factors:

• Payment History (35%) -Timely repayments matter the most. One missed EMI or delayed credit card bill can negatively impact your score.
• Credit Utilisation (30%) – Using under 30% of your total available credit is considered healthy.
• Length of Credit History (15%) – Older accounts show stability and build trust.
• Credit Mix (10%) – A mix of secured (like home loans) and unsecured (like credit cards) loans is ideal.
• Recent Inquiries (10%) – Too many recent applications for new cards or loans can make you look credit-hungry.

So, adding multiple cards might improve your utilisation ratio, but it also increases the chance of late payments, recent hard inquiries, and complexity in management.

When Multiple Cards Help and When They Hurt

Here’s when having multiple cards might actually work in your favour:

• Strategic Spending – Using specific cards for travel, groceries, or online shopping can earn you better rewards.
• Emergency Buffer – Multiple cards offer more credit access in case of emergencies.
• Lower Utilisation – Spread your spending across cards to keep individual card utilisation under 30%.

But here’s when it backfires:

• Missed Due Dates – Managing multiple bills increases chances of missed payments.
• Annual Fees – More cards can mean higher maintenance costs.
• Temptation to Overspend -Easy access to credit can lead to debt traps.
• Frequent Applications – Applying for several cards in a short span triggers hard inquiries that impact your credit.

Best Practices for Credit Card Usage in India

Whether you hold one credit card or five, here are golden rules to follow:

1. Always Pay in Full – Carrying a balance means interest charges and possible score damage.
2. Set Reminders or Auto-Debits – Avoid late fees and negative marks by automating payments.
3. Check Your Credit Report Regularly – Monitor for errors or fraud across bureaus.
4. Don’t Close Old Cards – The older the card, the better for your credit history length.
5. Don’t Apply Too Often – Let new cards age before applying for another.
6. Use Responsibly – Keep your utilisation low and never use one card to pay another.

Conclusion

In India’s evolving credit culture, myths like “more cards mean better scores” can mislead even the financially savvy. Instead of accumulating plastic, focus on responsible financial habits. One or two well-managed credit cards, paid off in full and used wisely, can do far more for your credit score than five cards used recklessly.

So the next time someone suggests applying for yet another credit card to improve your score pause, reflect, and remember: when it comes to credit, quality always trumps quantity.