Having multiple credit cards for various perks can result in high-interest debt and a damaged credit score, according to Satish Mehta, Founder of Athena CredXpert. Your credit score reflects your ability to repay a loan, and several factors can contribute to a low score. Delinquency on existing loans, numerous unsecured loans, frequent loan inquiries, and often maxing out credit card limits can all negatively impact your score. While credit scores are typically accurate, discrepancies can occur due to errors in personal details or deduplication processes by credit bureaus. Mehta's analysis of 1,000 credit reports revealed significant differences between scores from different bureaus, which can affect borrowing decisions. He advises individuals to stop borrowing, repay high-interest loans first, and avoid using credit cards excessively. The "buy now, pay later" option is particularly problematic, as it mortgages future cash flow needed for existing expenses. For those struggling with debt, Mehta suggests debt consolidation as a viable option, though caution is advised to avoid hidden costs. The RBI has also implemented guidelines to ensure fair debt collection practices, offering consumers better protection. In summary, while having a few credit cards is fine, over-reliance on them can lead to financial instability and long-term credit score damage.
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