At a Glance

Your credit card utilization is one of the most important factors when determining your credit score. Credit card utilization rate is the amount you owe divided by your available credit limit. Therefore using less credit, and generally owing less than 30% of your total available borrowing limit, is better for your overall score.If your credit card utilization rate goes over this, your credit score could be negatively impacted.

In this article, you’ll learn:



is the average credit utilization for those with exceptional FICO scores (above 800).

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What is a credit card utilization ratio?

A credit card utilization ratio is the percentage of your credit limit currently used on your credit card. It’s a critical factor that lenders use to determine your creditworthiness and how likely you are to repay your debts.

How does credit utilization affect your credit score?

Credit utilization is an important factor in calculating your credit score, and it can significantly impact your overall score. In fact, credit utilization accounts for about 30% of your FICO credit score, which is one of the most widely used credit scoring models.

Why does credit utilization affect credit score?

When you have a high credit utilization rate, it suggests to lenders that you may be relying too much on credit and may be at risk of defaulting on your debts. As a result, your credit score may decrease. Conversely, if you have a low credit utilization rate, it suggests to lenders that you’re using credit responsibly, which can positively impact your credit score.

How is the credit card utilization ratio calculated?

To calculate your credit card utilization ratio, divide your credit card balance by your credit limit and multiply by 100 to get a percentage. For example, if you have a credit limit of $10,000 and a balance of $2,000, your utilization ratio would be 20% (2,000 ÷ 10,000 x 100 = 20%).

What is a good credit utilization rate?

It’s generally recommended to keep your credit card utilization ratio below 30%, as high utilization ratios can negatively impact your credit score and suggest to lenders that you may be a higher-risk borrower. However, lower utilization ratios are even better for your credit score, and some experts recommend aiming for a utilization ratio below 10% to maximize your credit score.

How to improve credit utilization ratio?

If you have a high credit utilization ratio, there are several steps you can take to improve it:

  • Pay down your balances: The easiest way to lower your credit utilization ratio is to pay down your credit card balances. Aim to keep your balances below 30% of your available credit limit, which can help improve your credit score.
  • Increase your credit limit: If you have a good credit history, you may be able to request a credit limit increase from your credit card issuer. This can help increase your available credit and lower your credit utilization ratio.
  • Use multiple cards: If you have multiple credit cards, you can use them strategically to keep your credit utilization ratio low. For example, you could use one card for everyday expenses and another for larger purchases.
  • Pay your bills on time: Late payments can hurt your credit score and make it harder to manage your credit utilization. Pay your bills on time each month to avoid late fees and negative marks on your credit report.
  • Monitor your credit report: Regularly checking your credit report can help you stay on top of your credit utilization ratio and identify any errors or fraudulent activity that could impact your score.

Learn more: How to Lower Your Credit Utilization Ratio?


The time it takes for your credit score to go back up after high credit utilization can vary depending on several factors, like how high your utilization was, how quickly you paid off your balance and other factors in your credit report.

In general, if you’ve had high credit utilization, your credit score can take a few months to improve once you start using less of your available credit. This is because credit utilization is a key factor in calculating your credit score, so reducing your utilization can positively impact your score.

Yes, it’s possible to have zero credit utilization on your credit card, and it can be a good thing for your credit score, as it shows that you’re not relying heavily on credit and that you’re able to live within your means without relying on debt. However, it’s important to note that having zero credit utilization won’t necessarily boost your credit score, it just won’t hurt it.

That being said, if you want to build your credit score, it’s a good idea to use your credit card occasionally and pay off your balance in full each month. This can help demonstrate to lenders that you can manage credit responsibly and can help boost your credit score over time.

Yes, it’s generally a good idea to pay off credit cards in full each month if you can. There are several benefits to paying off your credit card balance in full:

  • You’ll avoid interest charges: If you carry a balance on your credit card, you’ll typically be charged interest on that balance, which can add up quickly over time. By paying off your balance in full each month, you’ll avoid paying interest charges and save money.
  • You’ll improve your credit score: By paying off your balance in full each month, you’ll keep your credit utilization low, which can help boost your credit score.
  • You’ll stay in control of your finances: By paying off your balance in full each month, you’ll avoid carrying debt from month to month and remain in control of your finances. This can help you avoid overspending and ensure you live within your means.

Of course, there may be times when you can’t pay off your credit card balance in full each month, like during a financial emergency or if you’re dealing with unexpected expenses. In those cases, it’s essential to pay as much as you can each month and work towards paying off your balance in full as soon as possible.

While using up to 100% of your credit card limit is possible, it’s generally not recommended. There are a few reasons for this:

High credit utilization can negatively impact your credit score: One factor that goes into calculating your credit score is your credit utilization, or the amount of credit you’re using compared to your credit limit. Using too much of your credit limit can indicate to lenders that you may be a higher-risk borrower, and your credit score may suffer.

High balances can be difficult to pay off: If you use a significant amount of your credit limit, paying off your balance in full each month can be more challenging. This can lead to interest charges and fees that can add up quickly, making it harder to pay down your debt.

It can signal financial instability: If you’re consistently using up all of your credit limits, it may be a sign that you’re living beyond your means or struggling to make ends meet. This can be a red flag to lenders and may make it more challenging to qualify for credit in the future.