Credit utilization is the percentage of your available revolving credit that you are currently using. It is the second most influential factor in many scoring models, and it can change quickly.
How to Calculate It
Divide your total card balances by your total credit limits. If you owe $1,500 across cards with a combined $5,000 limit, your utilization is 30%. Scoring models also look at the ratio on each individual card.
What Is a Good Level?
Staying below 30% is a common guideline, but people with the highest scores often stay under 10%.
Ways to Lower It
- Pay down balances starting with the highest-utilization card.
- Make multiple payments per month so lower balances are reported.
- Request a limit increase and avoid spending more.
- Spread balances across cards rather than maxing one.
- Keep old cards open to preserve total available credit.
Common Myths
You do not need to carry a balance to build credit. Paying in full each month is best, because you avoid interest and still show active use.
Because utilization has no long memory in most models, improvements can show up within one or two billing cycles.