Calculate your credit utilization ratio across all your cards and per card, and see how much to pay down to reach 30% or 10%, the levels associated with good credit scores.
What is credit utilization?
Credit utilization is how much of your available revolving credit you are using. It is one of the most important factors in credit scores: in the FICO model, "amounts owed" makes up about 30% of the score, and utilization is a big part of that.
Utilization = Total card balances ÷ total credit limits × 100
Scoring models look at both your overall utilization and the utilization on each card, so one maxed-out card can hurt even if your total is low.
What is a good utilization rate?
- Under 30%: the most common guideline.
- Under 10%: typical of people with the highest scores.
- 0%: not necessarily best. Showing a small balance that you pay off can be slightly better than no activity at all.
Worked example
You have three cards: $1,200 of $5,000, $800 of $2,000 and $0 of $3,000. Total balances are $2,000 against $10,000 of limits, so overall utilization is 20%. But Card 2 is at 40% on its own. Paying it down by $200 would bring it to 30%, and paying $1,000 overall would take your total to 10%.
How to lower your utilization quickly
- Pay before the statement date. Issuers usually report the statement balance, so paying earlier lowers the reported number.
- Make two payments a month.
- Ask for a credit limit increase, as long as you will not spend more.
- Keep old cards open. Closing a card removes its limit and raises utilization.
Frequently asked questions
How fast does utilization affect my score?
Quickly. Utilization has no long memory in most scoring models, so once lower balances are reported, your score can improve within a month or two.
Do loans count toward utilization?
No. Utilization applies to revolving credit such as credit cards and lines of credit, not installment loans like mortgages or car loans.
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Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.