Your credit utilisation ratio is the share of your available credit that you are using. It is one of the biggest factors in most credit scoring models.
How to Calculate It
Divide your total card balances by your total credit limits and multiply by 100. For example, a 1,500 balance on 5,000 of limits is 30%.
What Is a Good Ratio?
- Under 30% is commonly recommended.
- Under 10% is often linked with the highest scores.
- Both overall and per-card ratios can matter.
Ways to Lower It
- Pay down balances before the statement closes, since the statement balance is often what gets reported.
- Make more than one payment per month.
- Request a limit increase if you have a good history, but only if you will not spend more.
- Avoid closing unused no-fee cards, which reduces your total limit.
Overall vs Per-Card Utilisation
Scoring models often look at two numbers: your overall utilisation across all cards and the utilisation on each individual card. Example:
| Card | Balance | Limit | Utilisation |
|---|---|---|---|
| Card A | $900 | $1,000 | 90% |
| Card B | $0 | $4,000 | 0% |
| Total | $900 | $5,000 | 18% |
Overall utilisation is a healthy 18%, but Card A is nearly maxed out, which may still weigh on your score. Spreading balances or paying Card A down can help. (Illustrative example.)
When Is Utilisation Reported?
Most issuers report your balance to the credit bureaus around your statement closing date — not your due date. That means even if you pay in full every month, a large statement balance can show high utilisation. Paying part of the balance before the statement closes can lower the reported number.
Strategies to Keep Utilisation Low
- Make a mid-cycle payment before the statement date.
- Set balance alerts at 25% of your limit.
- Spread large purchases across cards or time them right after a statement closes.
- Request a credit limit increase if your income has grown, but don’t increase spending.
- Keep older no-fee cards open to preserve available credit.
How Fast Does It Change Your Score?
Because utilisation reflects current balances, it can change your score within a month or two after lower balances are reported. It is one of the quickest factors to improve, unlike late payments, which stay on reports for years.
A Month-by-Month Utilisation Plan
Imagine total card limits of $6,000 and a balance of $3,000 (50% utilisation).
| Month | Extra payment | Balance | Utilisation |
|---|---|---|---|
| Start | — | $3,000 | 50% |
| Month 1 | $500 | $2,500 | 42% |
| Month 2 | $500 | $2,000 | 33% |
| Month 3 | $500 | $1,500 | 25% |
| Month 4 | $500 | $1,000 | 17% |
(Illustrative; interest and new spending would change the numbers.) Many people notice score improvements as utilisation crosses below roughly 30% and again below 10%.
Utilisation Myths
- “0% is always best.” A small reported balance paid in full is usually fine.
- “Paying in full means low utilisation.” Not if a large balance is reported before you pay.
- “Closing unused cards helps.” It can raise utilisation by reducing available credit.
Quick Checklist
- Know your statement closing dates.
- Pay down balances before those dates when possible.
- Keep each card below about 30% of its limit.
- Track utilisation monthly in a simple spreadsheet or app.
Frequently Asked Questions
Does utilisation have a long-term effect?
In most models it reflects current balances, so lowering it can help fairly quickly.
Is 0% utilisation best?
Not always; showing small, paid-off usage is typically fine.
Conclusion
Keep balances low compared with your limits and your score will usually reflect it.
