- Owning more credit cards raises default risk from 9.10% to 11.60% for over four cards
- Credit utilisation below 41.27% links to lower default risk; above 81.12% doubles it
- Credit card debt over 4.57% of liabilities increases default risk from 18.29% to 21%
Many people believe having multiple credit cards is a sign of financial maturity. More cards mean more rewards, higher credit limits and greater flexibility. But fresh data suggests there is another side to the story.
According to an analysis by Equifax India, the chances of a borrower defaulting on payments rise steadily as the number of credit cards in their wallet increases. The study found that people with just one credit card have a default probability of 9.10 per cent. For those holding more than four cards, the figure climbs to 11.60 per cent -- a relative increase of nearly 28 per cent.
The findings come at a time when India's unsecured credit market is evolving rapidly. While credit cards remain a popular borrowing tool, industry reports show that small-ticket personal loans are increasingly gaining ground, making responsible credit behaviour even more important.
For borrowers, the message is simple: owning several cards is not automatically bad. Managing them poorly is.
"The data is unambiguous. Utilisation discipline and portfolio balance matter more than the number of cards someone's wallet holds, but both point in the same direction. Restraint, not restriction, is what protects a borrower's score," said Abhinav Thakur, Senior Vice President and Head of Data & Analytics at Equifax India.
Why More Cards Can Become A Problem
Equifax India's analysis found that the biggest share of borrowers still belongs to the safest category -- those with a single credit card. In contrast, nearly one in four borrowers falls into the highest-risk segment of holding more than four cards.
Experts say this is not because lenders dislike multiple cards. Instead, frequent applications and higher overall borrowing often signal rising financial stress.
Abhinav Thakur noted that lenders closely watch not just the number of cards, but also how responsibly they are used. Maintaining a balanced credit portfolio and avoiding excessive dependence on revolving credit are key factors that help preserve a healthy credit profile.
Five habits that can protect your credit score:-
1. Keep credit utilisation low: One of the strongest signals lenders monitor is how much of your available credit you actually use. Equifax India's data shows borrowers who kept average credit utilisation below 41.27 per cent had significantly lower default risk. Once utilisation crossed 81.12 per cent, the default rate more than doubled-from 11.99 per cent to 24.77 per cent. Financial planners generally recommend keeping utilisation below 30 per cent, even if your credit limit is much higher, as it reflects disciplined borrowing.
2. Don't let card debt dominate your liabilities: Credit card balances should remain a small part of your total debt. The analysis found that when credit card balances exceeded 4.57 per cent of a borrower's overall liabilities, default risk rose from 18.29 per cent to over 21 per cent. If you're already servicing personal loans or EMIs, relying heavily on credit cards can become a warning sign for lenders.
3. Think twice before applying for another card: Every new card may look attractive because of welcome bonuses or cashback offers. But borrowers with just one credit card had the lowest default probability at 9.10 per cent, while those holding more than four cards recorded 11.60 per cent. That does not mean everyone should stick to a single card. It simply shows that frequent applications and multiple active cards often coincide with higher repayment risks.
4. Hold on to older credit accounts: Closing your oldest credit card may not always be the smartest move. Equifax India's data shows accounts older than 72.5 months recorded a default rate of 16.63 per cent, compared with 21.17 per cent for accounts younger than 36.5 months. A longer credit history gives lenders more evidence of consistent repayment behaviour.
5. Treat higher limits as trust, not spending power: Higher credit limits are usually awarded to customers who have demonstrated responsible borrowing over time. Borrowers with credit limits above Rs 1.8 lakh showed a lower default rate of 17.01 per cent, compared with 20.43 per cent among those whose limits were below Rs 73,015. The idea is not to spend more simply because you can. A higher limit can actually help lower your utilisation ratio if spending remains under control.
Discipline Matters More Than The Number Of Cards
According to Siddharth Maurya, Managing Director, Vibhavangal Anukulkara, credit cards can be valuable financial tools, but only when backed by disciplined repayment.
He said borrowers should keep their credit utilisation low, pay outstanding dues in full and on time, avoid applying for multiple cards simultaneously and retain older credit card accounts to build a stronger credit history. He also advised against allowing credit card debt to become a major share of overall liabilities, especially when servicing EMIs or personal loans, adding that higher credit limits should be viewed as a lender's trust rather than an invitation to spend more.
The takeaway is straightforward. Credit cards themselves do not damage your credit score. Poor financial habits do. Whether you own one card or several, timely repayments, low utilisation and a long, healthy credit history remain the strongest foundations of a good credit profile.
