Credit Utilization Explained

What is credit utilization?

Credit utilization is the ratio of revolving balance to revolving credit limit, calculated both per card and across all revolving accounts. FICO® reads the balance reported on your statement close date — not your live balance.

Why this matters

• Represents 30% of your FICO® score — second only to payment history.
• Resets every month, making it the only factor that can change scores in 30 days.
• Both per-card and aggregate ratios are scored; one maxed card hurts even if the aggregate is low.

How it works

• ›Each card's statement close reports current balance to the bureaus.
• ›FICO® calculates aggregate utilization (all balances ÷ all limits) and per-card utilization.
• ›Optimal: 0% on all but one card, 1–9% on that one. Aggregate target: under 10%.
• ›Above 30% triggers material score loss; above 50%, severe; above 90%, maximum.

Examples in practice

Step-by-step process

1. 1

   Identify each card's statement close date

   Available in the card's online portal — not the same as the due date.

2. 2

   Pay down to target two days before close

   Allow time for the payment to post.

3. 3

   Pay the remaining statement balance by the due date

   Avoid interest.

4. 4

   Request credit-limit increases every 6 months

   Higher limits = lower utilization at the same spend.

Action checklist

• Mapped every card's statement close date
• Set calendar reminders 3 days before each close
• Aggregate utilization below 10%
• No single card above 30%
• Limit-increase requests on file for accounts 6+ months old

Common mistakes to avoid

• Confusing statement close with due date
• Paying right after the statement reports — too late
• Closing a paid-off card — drops total limit, raises utilization

Frequently asked questions