Credit utilization — the percentage of your available revolving credit you're currently using — is one of the most influential factors in your credit score, second only to payment history.
How It's Calculated
Divide your total revolving credit balances by your total available credit limits, then multiply by 100. Using $3,000 of a $10,000 total limit across your cards gives a 30% utilization rate.
Why It Matters
High utilization signals to lenders that you may be relying heavily on available credit, which can lower your score even if you make every payment on time.
What's a Good Target
Keeping utilization below 30% is a commonly cited guideline, with under 10% viewed even more favourably for those aiming for excellent credit.
How to Lower It Quickly
- Pay down balances before your statement date, not just the due date
- Ask for a credit limit increase without adding new spending
- Spread balances across multiple cards rather than maxing one out