Credit utilization

The calculation

Scoring models look at this two ways at once: your aggregate ratio across all revolving accounts, and your per-card ratio on each individual account. One maxed-out card can hurt even when your overall ratio looks healthy, which is an argument for spreading balances rather than concentrating them.

Only revolving credit counts — credit cards and lines of credit. Installment loans (auto, mortgage, student) are evaluated separately and do not enter this ratio.

What to target

The common advice is to stay under 30%. That number is a rule of thumb, not a published threshold. FICO scores utilization on a continuous curve, which has a practical implication people miss: going from 80% to 60% helps, even though you never crossed 30%. You do not need to reach a magic number before you start seeing benefit.

The lowest-risk profile tends to be a small non-zero balance — a few percent. Reporting exactly 0% across every card occasionally scores marginally lower than reporting 1–9%, because the model wants evidence of active, managed use. The difference is minor and not worth engineering.

The timing detail that costs people points

This is the single most actionable thing on this page. There are two dates in a billing cycle and most people only know about one:

• Statement closing date — the cycle ends and your balance is reported to the credit bureaus.
• Payment due date — usually about three weeks later. Paying by this date avoids interest and late marks.

Your score sees the statement closing balance. So someone who charges $4,000 on a $5,000-limit card each month and pays it off in full, on time, forever, still reports 80% utilization every single month. They pay no interest, have flawless payment history, and are being penalised on 30% of their score for no reason.

The fix: find your statement closing date on your statement or in the app, and make a payment a few days before it. Same money, same month — different reported number.

Three ways to lower utilization

1. Pay down the balance. Direct, and it also stops the interest — worth roughly 22.15% a year on cards assessed interest, per the Federal Reserve's G.19.
2. Raise your limits. Increases the denominator without touching the numerator. Ask your issuer whether the request uses a soft pull; many do.
3. Pay before the statement closes. Costs nothing and changes the reported figure immediately.

And one way to accidentally raise it: closing a card. Removing a $5,000 limit from the denominator while your balances stay the same raises your ratio instantly.

See it in numbers

The Credit Score Factor Estimator lets you change utilization while holding everything else constant, so you can see roughly how much of your available headroom sits in this one factor. If you are carrying balances across several cards, the debt payoff calculator will tell you the cheapest order to clear them.

Frequently asked questions