How is credit utilization calculated?

Credit utilization = (Total credit card balances ÷ Total credit limits) × 100

Example:

• You have $1,000 balance on a $5,000 limit credit card

• $1,000 ÷ $5,000 = 0.20 (20% utilization)

Does credit utilization affect my credit score?

Yes! High utilization can lower your score, while low utilization boosts it.

When does credit utilization reset?

Your utilization updates when your credit card reports your balance to the bureaus—usually at the statement closing date, not the payment due date.

How can I lower my credit utilization?

• Pay down balances before the statement closes

• Request a credit limit increase (but don’t increase spending)

• Spread charges across multiple cards

• Make multiple payments per month

Does closing a credit card hurt utilization?

Yes! Closing a credit card reduces your total available credit, which can increase your utilization ratio and lower your score.

What’s the ideal credit utilization for the best score?

For maximum credit score benefits, aim for under 10% utilization, but never 0%—showing some usage proves you’re an active borrower.

Managing Your Credit Utilization:

Unlike other factors, utilization can change rapidly as balances are reported

• Pay down credit card balances

• Keep old accounts open to maintain available credit

• Request credit limit increases

• Consider making multiple payments per month