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Bottom Line Up Front

  • Your personal credit utilization ratio is the percent of available credit on all open lines of credit— including credit cards and loans. 
  • Keeping a low utilization ratio is the fastest way to improve your credit score. Aim to maintain a utilization rate of less than 10%.
  • Checking your balance regularly, reducing debt, making early payments and requesting a credit increase are all good ways to keep your ratio in a healthy range.

You may be completely on top of how much you spend and do your best to always spend within your means, but did you know your spending habits might actually be affecting your credit score? It’s true. Your credit card utilization ratio could affect up to 30 percent of your credit score. What exactly is a credit card utilization ratio and how can you improve it? Read on to find out.

What’s a Credit Card Utilization Ratio?

When you’re approved for credit cards or lines of credit, your lender(s) will set a credit limit. This is the maximum amount you’re allowed to borrow. Your personal credit utilization ratio is how much of that credit you use. In other words, it’s the percent of your available credit you’ve borrowed. For example, if your credit limit is $5,000 and your credit card balance is $1,500, you’ve used 30% of your available credit. That means your personal credit utilization ratio is 30%.

$1,500/$5,000 = .30 or 30%

You have both a per-card utilization ratio as well as an overall utilization ratio. The overall ratio compares the limits and balances of all your credit accounts. The major credit bureaus may factor in both utilization ratios when calculating your score.

What's a Good Credit Utilization Ratio?

It’s best to have a low credit card utilization rate. Anything above 30% is considered too high and will negatively affect your credit score. Aim to maintain a utilization rate of less than 10% to show lenders you’re serious about using credit wisely. Keeping a low utilization ratio is also the fastest way to improve your score.

Is 0 Credit Utilization Bad?

While not using any of your available credit may not lower your credit score, it could have other impacts. One of those is missing out on potential reward points. By using credit responsibly, you can make charges, pay them off and repeat the process without overspending. Not using what's available to you could cause suspicion of inactivity. To avoid that, it's best to have a credit utilization between 1-9% to help secure a higher credit score.

Improving Your Credit Card Utilization Ratio

Here are a few ideas that might help improve your credit card utilization ratio.

  • Keep tabs on your accounts. Regularly check your credit card balances so you can work to stay below 30% of your total credit limit.
  • Reduce your debt. If you carry a balance on your credit card accounts each month, it may be difficult to improve your credit card utilization ratio. Try to pay more than the minimum payment each month to prevent your balance from growing. Consider digging into your savings to help reduce your debt or following other debt repayment strategies.
  • Make early payments. It’s possible that your credit issuer could report to the credit bureaus before you make your payment. This means that even if you’re paying in full each month, if may look like you have a high utilization ratio at the time they report. To avoid this and any impact to your credit score, consider making mid-cycle payments.
  • Request a credit increase. Having a higher credit limit could mean that you have a lower credit utilization ratio if you charge no more than you normally would. However, your request could be denied if your credit limit is already high. Be aware that your request might also temporarily lower your credit score a few points, especially if you make multiple credit limit increase requests.
  • Open a new card. Opening a new credit card could increase your available credit, giving you another payment method and an additional per-card utilization opportunity. Spreading out your monthly spending across cards could help keep your ratios down. However, as with requesting a higher credit limit, opening a new credit card could also lower your credit score temporarily and put you at risk for overspending, so be thoughtful before using this option.

A Membership Bonus

Navy Federal Credit Union primary credit card cardholders can see their FICO® Score for free at any time. It’s as easy as signing in to digital banking and accessing your credit card account. Checking your score online or in the mobile app won’t affect your credit score, and it’s updated monthly.


FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.