Credit Utilization: What It Is and Why 30% Matters
What is a good credit utilization ratio? How to calculate it per card and overall, why under 30% (ideally 10%) matters, and how statement timing changes what gets reported.
The formula
Credit utilization = balance / credit limit x 100
Carry $1,800 on a card with a $6,000 limit and your utilization is 30%. It is the second-largest input to a FICO score after payment history, worth roughly 30% of the score.
Per-card vs overall
Scoring models look at both:
- Overall utilization — total balances across all revolving accounts / total limits.
- Per-card utilization — each individual card.
One maxed card hurts even when your overall figure looks fine. Three cards with $10,000 limits each, $9,500 on one and $0 on the others, is 32% overall but 95% on a single card — and that single card drags the score down.
Utilization bands
| Utilization | Typical score effect |
|---|---|
| 0% | Slightly suboptimal — no activity reported |
| 1-9% | Best range |
| 10-29% | Very good, minimal drag |
| 30-49% | Noticeable drag |
| 50-74% | Significant damage |
| 75%+ | Severe; looks like credit stress |
The famous 30% is not a cliff. It is the point where the penalty becomes obvious. Below 10% is where the top scores live.
Worked example
You have three cards:
| Card | Balance | Limit |
|---|---|---|
| A | $2,400 | $5,000 |
| B | $600 | $8,000 |
| C | $0 | $3,000 |
Total balances $3,000, total limits $16,000, overall utilization = 3,000 / 16,000 = 18.75%. Card A alone is at 48%, though. Move $1,000 from A to B and the overall number does not change at all — but A drops to 28% and the per-card penalty largely disappears.
Statement date beats due date
Card issuers usually report your balance on the statement closing date, not after your payment posts. Pay in full every month and you can still show 60% utilization if you spend heavily and the statement closes before you pay.
Three fixes: 1. Make a payment a few days *before* the statement closes, not just before the due date. 2. Pay twice a month to keep the reported balance low. 3. Request a limit increase — the denominator grows, utilization falls, no behavior change needed.
Utilization is also not historical. It is recalculated from each month's report, so a bad month disappears the next cycle. There is nothing to "repair" over time.
FAQ
What is a good credit utilization ratio? Under 30% overall and per card, with 1-9% ideal. Zero on every card is slightly worse than a small reported balance.
Does paying off my card before the statement date help my score? Yes. A lower statement balance is a lower reported balance, which is what the score sees.
Should I close an unused credit card? Usually not. Closing removes its limit from the denominator and instantly raises your utilization.
Check what a balance actually costs with the Credit Card Calculator, and build a plan with the Credit Card Payoff Calculator. If you carry balances across several cards, compare orderings in debt snowball vs avalanche.
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*See what your balance really costs per month with the Credit Card Calculator.*