What Is Credit Utilization and How Does It Affect Your Score?
Credit utilization is the second biggest factor in your credit score. Here's what it is, how it works, and how to keep yours low.
Credit utilization is the percentage of your total available credit that you are currently using. If you have a $1,000 credit limit and a $300 balance, your utilization is 30%. It accounts for 30% of your FICO score. Keeping your utilization below 10% gives you the best possible score impact. Above 30% starts hurting your score.
How credit utilization is calculated
Your credit utilization ratio is calculated by dividing your total credit card balances by your total credit card limits, then multiplying by 100.
Example: $500 balance ÷ $2,000 limit × 100 = 25% utilization
Credit bureaus calculate utilization two ways: your overall utilization across all cards, and your utilization on each individual card. Both matter. Having one card maxed out hurts even if your overall utilization is low.
Utilization ranges and their score impact
| Utilization rate | Score impact | What it signals |
|---|---|---|
| 0–10% | Excellent | Ideal. Maximum positive impact on your score. |
| 11–30% | Good | Acceptable. Minor negative impact. |
| 31–50% | Fair | Starting to hurt. Lenders notice. |
| 51–75% | Poor | Significant damage to your score. |
| 76–100% | Very poor | Major negative signal. Lenders see high risk. |
How to lower your credit utilization
- Pay before your statement closes — Your issuer reports your balance on the statement closing date. Paying before that date lowers your reported balance.
- Request a credit limit increase — More available credit with the same balance = lower utilization. Ask after 6-12 months of on-time payments.
- Open a new credit card — Adds to your total available credit. Only do this if you can get approved without hurting your score.
- Never close old cards — Closing a card removes that limit from your total available credit, raising your utilization ratio.
- Make multiple payments per month — Paying twice a month keeps your running balance lower throughout the billing cycle.
Use our free credit utilization calculator to find your current rate instantly.