How Credit Cards Can Impact Auto Ownership Dreams

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Fun fact – the man who holds the record of owning many credit cards has about 1500 cards worth a little bit shy of $2 million. What’s even surprising is that he can still land a car loan as he still maintains a high credit score. The question is, what number of credit cards is too many?

Since most people rely on credit cards to build their credit history, getting an answer to this question can be a lifesaver. While owning many cards can impact some credit scores positively, others will make it tank.

Here are some insights on how to determine your maximum limit of credit card ownership to land an auto loan at a favorable rate:

Closing Accounts Could Hurt Your Score

Car dealerships and auto loan lenders will tend to look into a couple of credit-scoring factors to determine whether you are a responsible borrower, according to Bob Gillingham Ford – a renowned Ford dealership. Some of these factors include your credit utilization ratio and your debt to income ratio. Closing credit card accounts can increase your credit utilization ratio which is damaging.

Your credit utilization ratio is the total number of credit balance you have divided by the total limit of all open credit cards. A low limit is equal to higher scores and a higher chance to land the auto loan you desire. Upon closing a credit card account, your score will drop temporarily.

When to Close Down an Account

The decision of whether to close down credit card accounts or not comes tied to a number of ‘what ifs’ depending on your exact situation. If you plan to apply for the auto loan in three to six months, then the wise decision is to leave the accounts open. In case your score is significantly high, closing the accounts will lower your score, but sometimes the damage can be insignificant.

If you struggle with your credit cards and keeping them in check, consider closing the accounts. Although your score will take a dip, it is better than having to battle with the ideas of taking in more credit. Weigh between the short-term and long-term benefits of closing down your accounts.

Consider Other Factors

Sometimes you might fly blind when determining the best decision without a clear picture of your credit scores. Understanding your numbers can help you identify potential loopholes. For instance, you might realize that you have excess revolving credit which will call for closing the accounts. On the other hand, closing your accounts when the revolving credit is not listed as part of the problems will be unwise. Consider other factors like the top credit scoring factor – payment history and your credit utilization ratio.

Can You Open A New Account?

In case your assessment reveals that your many credit cards aren’t affecting your score, you can open a new credit account, according to The Balance. However, avoid opening new accounts just before applying for your car loan as it may lower your credit score. This is because the lender you will be working with will require drawing information from your credit report which results in a hard inquiry.


While a single inquiry can be barely harmful, shopping around for multiple cards will cause more damage as each lender will have to access your report. Consider whether you will require borrowing a big loan before proceeding to open a new account. Talk to a financial advisor before making significant decisions that could affect your credit score.


Protecting your credit score should be a priority when opening credit card accounts. Always take into account the number of credit cards you can comfortably manage without straining your finances. Use the above tips to increase your chances of landing a favorable auto loan.

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