Credit Utilization: How Much of Your Limit to Use
Credit utilization is the share of your credit card limits you're using, based on the balances your issuers report. It's part of "amounts owed," which makes up 30% of your FICO Score, and it's one of the quickest parts of your score to improve. Lower is better. Common advice is to stay under 30%, and people with the highest scores tend to use much less.
How to calculate it
Utilization = total card balances ÷ total card limits
| Card | Balance | Limit |
| Card A | $300 | $1,000 |
| Card B | $200 | $4,000 |
| Total | $500 | $5,000 |
Overall utilization: $500 ÷ $5,000 = 10%. Card A on its own is at 30%. Scoring models look at both numbers.
The balance that counts isn't what you think
Issuers usually report the balance on your statement date, not the due date. So even if you pay in full every month, a large balance on the statement date can show up as high utilization.
To report a lower balance, pay before the statement closes, not just by the due date.
It has no memory
Most scoring models only look at your current balances. A high month hurts your score while it's reported, and the effect goes away once a lower balance is reported. That makes utilization different from late payments, which stay on your report for years.
Ways to lower it
- Pay before the statement date.
- Pay more than once a month.
- Ask for a credit limit increase. Ask whether the issuer will do a hard inquiry first. See what a hard inquiry does.
- Keep old no-fee cards open. Closing one cuts your total limit.
- Spread spending across cards so no single card runs near its limit.
If you have a small limit
A $200 secured card makes utilization easy to push up: a $60 balance is already 30%. Keep a small recurring charge on it and pay it off before the statement date. See do secured cards build credit.
FAQ
Is 0% utilization best? Not always. Showing some use, even a small balance on one card, can score slightly better than every card reporting $0. The difference is small, so don't carry a balance to chase it. You'd pay interest.
Does utilization include loans? Card (revolving) utilization is what matters most. Installment loans such as car loans are counted differently.
How fast does my score improve after paying down? Usually once the next lower balance is reported, often within a month.
Figures and rules in this article are checked against the official sources below. Where they disagree with us, they win.
- myFICO 'What should my credit utilization ratio be?' (amounts owed = 30% of FICO Score)
- CFPB credit-score explainer
