2 Reasons People With High Credit Scores Have Multiple Credit Cards

I came across some surprising information about people with perfect credit scores the other day: They have more credit cards than the average person.

Consumers with a perfect FICO® Score of 850 have an average of about six credit cards, compared to the average consumer with four cards.

While it can be financially precarious to have too many cards in your wallet -- even if they are the best rewards cards like these -- your credit score might benefit from it. Here's how.

1. A long credit history is good for your credit score

Older consumers are much more likely to have a perfect credit score. About 66% of people with a perfect score are baby boomers, while just 8% of millennials and younger consumers have perfect scores.

This is partly because the length of your credit history accounts for 15% of your credit score. Longer histories give lenders a more complete picture of your creditworthiness, so the longer, the better. For this reason, many people with high credit scores keep their old credit card accounts open, even if they don't use them very often.

It's also important to mention that 35% of your credit score is determined by whether you've paid your bills on time. So, the longer your history, the better chances you have to show you've been keeping up with your payments.

Related: If you already have good credit, you can get access to the best rewards cards. Click here to see our list of top credit cards.

2. Having multiple cards open can help with your credit utilization

Another important part of your credit score is how much of your available credit you're using. A whopping 30% of your score is determined by your usage, also called your credit utilization.

People with excellent credit scores have access to lots of available credit but use very little. Consumers with an 850 credit score only use about 4% of their available credit, compared to about 29% for the rest of us.

For example, let's assume you have four cash back credit cards, each with a credit limit of $10,000, giving you access to $40,000 of credit. If you only use 4% of your available credit, you would have a total balance across all cards of just $1,600. On the other hand, if your credit utilization is 29%, you would have a total balance of $11,600.

The good news is you don't need six credit cards to have a low credit utilization rate. You just need to pay down the balances on your current cards. Most experts recommend a utilization rate below 30%, and under 10% would be optimal for improving your score.

Don't try to boost your credit by opening new cards

While people with excellent credit scores have more credit cards than the average person, opening new cards to try to boost your score isn't the answer. I have an above-average score of 769 and only use one credit card.

The most important thing you can do to improve your score is to pay your account balances on time, whether that's a credit card bill, mortgage payment, or car loan. Remember, your history of on-time payments accounts for more than one-third of your score.

And once you pay off a credit card, consider keeping the account open if you've had it for a long time.