Credit Utilization Explained

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%.

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.

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.

• 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

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.

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.