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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 will set a credit limit, or the maximum amount you’re allowed to borrow. How much of that credit limit you use is your credit card utilization. Or, in other words, the percent of your available credit you’ve borrowed. Here’s an example: If you have a $5,000 credit card limit and your balance is $1,500, then your credit card utilization ratio is 30 percent.

$1,500 = .30 or 30%


In addition to having a per-card utilization, you also have an overall utilization ratio that compares the limits and balances of all your credit accounts. The major credit bureaus may factor in both types of credit card utilization ratios when calculating your 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 percent 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. You might pay off your balance in full every month, but you might still be dinged for a high utilization ratio if your issuer reports to the credit bureau before you make your payment. Making an additional payment mid-cycle might help to keep your credit card utilization ratio in check.
  • 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. Although, 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.