Finance · Quick Answer
What is a good credit utilization ratio?
Credit utilization = current balances / total credit limits. For the best FICO scores, keep utilization below 30% overall, and ideally under 10%. A $10,000 total limit means carrying less than $1,000 in reported balances.
How it's calculated
Utilization = Total Revolving Balances / Total Revolving Credit Limits
FICO looks at both overall utilization and per-card utilization. A single maxed-out card hurts, even if your total utilization is low.
Benchmarks
- 0%: technically ideal but some models penalize zero usage; aim for 1-3%
- 1-9%: excellent, scores benefit most
- 10-29%: good, no material score impact
- 30-49%: moderate drag on score (5-20 points)
- 50-79%: significant hit (20-50 points)
- 80%+: severe hit (50-100+ points)
What the credit bureaus see
Bureaus report the balance on your statement closing date, not after your payment posts. To minimize reported utilization:
- Pay before the statement closes, not just by the due date
- Check your statement balance, that's the number reported, not the current balance
- Ask for a credit-limit increase without a hard inquiry, this lowers utilization instantly
- Avoid closing old cards, it shrinks your total limit and raises utilization
Why it matters
Utilization is 30% of your FICO score, second only to payment history (35%). It's one of the fastest-moving FICO inputs: a single pay-down can move your score within 30 days.
Utilization tactics
- Spread spending across multiple cards
- Make multiple payments per month to keep balances low
- For mortgage applications, pay balances to near-zero 60 days before applying
- Don't close unused cards during a score-sensitive window