Too Many Accounts with Balances is a credit killer

You might think that you have been managing your credit well by juggling balances on several credit card accounts. Given the complexities of keeping up with so many accounts, you may have indeed managed them well.

The problem with carrying balances on so many accounts is that FICO credit scoring formulas deduct points from your scores as a penalty. It may seem counterintuitive to punish you for managing so many accounts without fault.

“Too Many Accounts with Balances” Credit Bureau Risk Score Reason
Equifax 5
Experian 5
TransUnion 5
NextGen T1

However, the problem with having so many accounts with balances is that you are more susceptible to problems that can cause your scores and financial situation to plummet. Here are some scenarios that are more likely to occur when you carry balances on several open lines of credit:

  • Higher risk of missed payments. There is a certain risk of missing a payment on an account. When you are dealing with multiple accounts, this risk is magnified. More importantly, it is easy to forget to pay one account when you are dealing with seven other payments each month. Forgetting a payment can lower your scores and cause a late fee to be assessed.
  • Increased risk of multiple late and over-the-limit fees. When you are unable to pay your unsecured debt, you may get hit with a late fee. If you are pushed over the credit limit, then an additional fee can be assessed. Having this occur on two accounts can be difficult to handle. If you are struggling to repay ten accounts, the costs can be much higher. You may not be able to restore so many accounts to current status when your situation improves, leading to defaults.
  • Higher risk of interest rate hikes. Credit card companies now must wait until you are 60 days delinquent before they can impose penalty interest rates. The more accounts that you carry balances on, the higher the likelihood that you can find yourself in a position where an account is neglected for a couple of months. Your 9.24% APR could be replaced with 29.74%, adding hundreds or thousands of additional dollars in finance charges each year.

If you are denied credit for having too many accounts with balances, you should focus on paying off at least one of your accounts in full. This is a dangerous indication that your personal finances are heading into troubled waters.

You should strongly consider credit counseling as test to see if your finances are healthy enough to continue on your current path. You may find some disturbing trends in your use of credit that can jeopardize your financial future.

If you are wondering how many accounts you should be carrying balances on, there is no published magic number. However, having any accounts that carry balances from one month to the next indicates that you are paying finance charges and may lack the financial strength or knowledge to pay off the balances in full.

Even if you pay all balances off in full each month, it is theoretically possible that you could see this warning. This is due to the fact that the 30% of your credit scoring formulas that focus on your credit utilization rate are calculated from the total balance on the account that month. Therefore, this can fluctuate if you regularly charge high amounts of debt on your accounts, even if the balances are paid in full monthly.


Too many accounts with balances is Code 5 on FICO-based credit scoring products. NextGen includes the factor as Code T1. For more information on credit scoring, see the complete list of credit score factors.

Kenneth Long
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Kenneth Long

President at Debtors Unite
Kenneth Long is President of Debtors Unite, Inc. as well as President and Vice Chairman for Vision Credit Education, Inc. He served as a regional coordinator for the North Carolina Saves campaign. Long co-founded the Wake EITC Coalition along with Family Resource Center of Raleigh.

Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.

Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.

In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.

Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!

Favorite quote:

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."

Thomas Jefferson
Kenneth Long
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