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Not financial advice: this is general education. Your situation is different, so read every product's full terms and consider free help from a nonprofit credit counselor before taking on new credit.
What it is
Credit utilization is how much of your available revolving credit you're using. Divide your credit card balances by your credit limits. A $300 balance on a $1,000 limit is 30% utilization. Scoring models look at it per card and across all your cards.
Why it matters
myFICO breaks a FICO score into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%). Utilization is a big part of amounts owed.
The "under 30%" rule
Keeping utilization under 30% is common advice, including from the CFPB, but it isn't a magic line. Lower is generally better. Using a small amount and paying it off shows active, responsible use.
Statement dates matter
Issuers usually report the balance on your statement, not what you owe after paying. So even if you pay in full every month, a high statement balance can show as high utilization. To keep it low, pay down part of the balance before the statement closes.
Good news: it can recover quickly
In most widely used scoring models, utilization is based on the balances currently reported, so once balances drop and the new figures report, your score can rebound. Late payments, by contrast, can stay on your report for up to seven years.
Ways to lower utilization
- Pay before the statement closing date, or make several smaller payments a month.
- Ask for a credit limit increase. This may involve a hard inquiry, so ask first.
- Keep old no-fee cards open to keep your total available credit.
- Don't open new cards just to raise your total limit.
Sources
Official sources this article relies on, checked October 15, 2026. Rules and prices change, so confirm details at the source.
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