MoneyMinding Monitor

Question: How many credit cards can you leverage for investing before it damages your credit?

Answer: If only the answer were as simple as a number!  I could say, well, 9 - and you’d be on your way!  In reality, the credit card companies and credit bureaus don’t care whether you are using your cards to buy stereo equipment, or to invest.  But they do care about how you manage your credit. 

Here are the areas to be aware of:

• The effect on your credit score when you fill out a credit application.  Each time a company or financial institution makes an inquiry, it can adversely affect your credit rating.  If you fill out a credit application, be reasonably sure that you will qualify for it.
• The relationship between your outstanding balance and your limit - you should use only 1/3 of your available credit at any time.  Leave lots of room!
• Your frequency of use - it’s better to use a card regularly, which can be as little as once a year.  Keep it somewhat active.
• Overall history of the card and the length of time you’ve had it.  A long credit history with a couple of bumps and snags is better than a short history where you are an unknown quantity.
• Your total debt-to-service ratio; in other words, your debt payments compared to your income. Again, keep this to a maximum of 30%.

If you keep within these guidelines, you can use the credit available to you to fund wonderful income-generating projects, or to take advantage of a terrific opportunity and have a terrific credit score.