Can I Improve My Credit Score by Using Several Credit Cards Instead of Just One?

I want to clarify the myth about credit utilization percentages and credit scores.  I have heard and read inaccurate advice regarding charging everything on one credit card verses dividing it up among many cards.

First, what is credit utilization? Credit utilization is how much of your available credit limits on credit cards you currently have used up, expressed as a percentage.  Credit utilization is calculated for two categories, revolving and installment.  Revolving accounts are credit cards that don’t require payment in full and installment accounts are mortgages, auto loans and student loans.  For credit cards, utilization is how close you are to your credit limit.  For installment accounts, it is based on how much of your loan you have paid off.

Indebtedness represents 30% of your credit score, which is the second most important factor.  Both installment and revolving utilization are included in the score, along with individual account utilization.

Revolving accounts

Revolving utilization is calculated by dividing the total balances of your open credit card accounts by their total credit limits and multiplying that amount by 100.  For example, your balances total $2,000 and your credit limits total $10,000.  Utilization is calculated by dividing $2,000 by $10,000 which is .2; .2 multiplied by 100 is 20%. You have used 20% of your available revolving credit.  Most closed accounts are not included in this calculation, but open accounts with a zero balance are included.

Installment accounts

Installment accounts are calculated the same way but the terminology is different.  The total installment balances are divided by the total principle amounts and then multiplied by 100.  Closed accounts and those with zero balances, which are considered the same as closed, are not included for this calculation.

Individual accounts

Individual account utilization uses the same formula but is calculated on each individual account separately. The guidelines for revolving and installment apply for each individual account.

According to FICO, those with the highest scores of 760 and above have an average utilization of 7 percent.  I recommend keeping balance to 10 percent or less of the credit limit. You don’t want a rate of 0 percent, because that indicates you aren’t using credit.

Now back to the original question, using all or most of your cards to spread out your balances can negatively impact your score. The reason is because you would have too many accounts with a balance.  You don’t want to max out one card, or have balances on all your cards.  Use a few of your cards and keep your balances low, so your utilization is below 10 percent.  In fact, the best strategy is to use one card that has a very high credit limit, and only that card.

Credit Expert, John Ulzheimer, is the President of Consumer Education at, the credit blogger for, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.


Leave a Reply