Credit utilization

What It Means

Credit utilization is how much of your revolving creditRevolving creditCredit you can borrow, repay and borrow again up to a set limit, such as a credit card or a line of credit. See more you're using, written as a percentage. For one card, divide its balance by its credit limitCredit limitThe most your card company lets you owe on a credit card or line of credit at one time. See more and multiply by 100. To get one figure for all your cards, add up the balances, add up the limits, and divide the first total by the second. Scoring models read the balances in your credit reportCredit reportA record of how you've borrowed and repaid, kept by credit bureaus and sold to lenders, landlords, insurers and others who decide whether to deal with you. See more, which are usually the statement balancesStatement balanceWhat you owed on a credit card when the billing cycle closed, as printed on that month's statement. See more your card companies reported, so the number can differ from what your banking app shows today.

How People Say It

• "My utilization spiked after the vacation."
• "Keep it under thirty percent, right?"
• "I paid it off, so why does my report still show a balance?"

The Breakdown

Worked example. Maya has three cards, and their last statements showed these figures:

What the result means. Maya's overall utilization is 18.4%, comfortably under the 30% guideline many lenders and credit bureauCredit bureauA company that collects information about how people use credit and sells it as credit reports; Equifax, Experian and TransUnion are the three nationwide ones. See more guides repeat. Card B tells a different story: it's using 60% of its own limit. Experian explains that utilization is figured for each card and overall, so moving part of that balance off Card B, or paying it down before its statement closes, helps both numbers.

Why today's balance may not match. Card companies usually report around the end of each billing cycle, when the statement balance is set. If Maya pays Card A in full on its due date, her report can still show $640 until the next statement reports a lower figure.

Good to Know

The 30% figure is a rule of thumb. Experian and myFICO both say lower is generally better, and Experian notes the highest scores tend to go with utilization under 10%. Depending on the model, Experian says, utilization can count for roughly 20% to 30% of a score: in FICO ScoresFICO scoreA credit score made by the company FICO from your credit report; base FICO Scores, including the widely used FICO Score 8, run from 300 to 850. See more it sits inside amounts owed, which myFICO weighs at 30% for the general population, and VantageScore 4.0VantageScoreA credit scoring model from the company VantageScore; version 4.0 runs from 300 to 850 and gives payment history the most weight, at 41%. See more lists credit utilization at 20%. Because it depends on what was last reported, utilization can improve quickly once lower balances reach your report.

Related Terms and Categories

• Credit limit

  The most your card company lets you owe on a credit card or line of credit at one time.

• Statement balance

  What you owed on a credit card when the billing cycle closed, as printed on that month's statement.

• Statement date

  The day a credit card's billing cycle closes and the statement balance is set; the due date comes afterward.

• Revolving credit

  Credit you can borrow, repay and borrow again up to a set limit, such as a credit card or a line of credit.

• FICO score

  A credit score made by the company FICO from your credit report; base FICO Scores, including the widely used FICO Score 8, run from 300 to 850.

• VantageScore

  A credit scoring model from the company VantageScore; version 4.0 runs from 300 to 850 and gives payment history the most weight, at 41%.

Debt and credit