Credit Utilization Explained
Credit utilization is one of the biggest factors in your credit score. Here's how it's calculated and how to improve it.
In This Article
What Is Credit Utilization?
Credit utilization is the percentage of your available revolving credit (mainly credit cards) that you're currently using. If you have a $10,000 total limit and $3,000 in balances, your utilization is 30%.
Why It Matters So Much
Credit utilization is typically the second-biggest factor in most credit scoring models, after payment history. Lower utilization signals to lenders that you're not overly reliant on credit.
What's Considered a Good Ratio?
Most experts recommend keeping utilization below 30%, with the best scores often associated with utilization under 10%. This applies both per-card and across all your accounts combined.
How to Lower Your Utilization
- Pay down balances before the statement closing date, not just the due date
- Request a credit limit increase (without adding new spending)
- Keep old, unused credit cards open to preserve available limit
- Spread balances across multiple cards rather than maxing one out
How Debt Relief Affects Utilization
During debt settlement, utilization often stays high or increases since balances remain until settled, which is one reason credit scores decline during a program, but utilization typically drops quickly once balances are resolved.
Use Our Calculator
Try our Credit Utilization Calculator to see exactly how your current balances and limits affect your score, and model what paying down specific balances would do.
How to Lower Your Utilization
- 1Pay down balances before the statement closing date, not just the due date
- 2Request a credit limit increase (without adding new spending)
- 3Keep old, unused credit cards open to preserve available limit
- 4Spread balances across multiple cards rather than maxing one out
Most experts recommend keeping utilization below 30%, with the best scores often associated with utilization under 10%.
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This article was researched using publicly available information from government agencies, consumer protection organizations, and, where applicable, official lender or provider disclosures. Sources were compared for accuracy before publication and are periodically reviewed for updates. See our Research Process and Content Review Policy for details.
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