Recalculated monthly
Credit utilization: how the 30% rule works
Credit utilization is the ratio of credit card balances to total credit limits. Lower is better — under 30% maintains good scores, under 10% maximises them. Utilization is the second-largest factor in your FICO score (30% weight). Pay down balances before the statement closing date to report a lower utilization to the bureaus, regardless of what you actually owe by the due date.
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Try calculatorKey takeaways
04 · ideas- Utilization is calculated on the statement closing date, not the due date
- Lower utilization generally correlates with higher scores across all ranges
- Per-card utilization matters separately from overall utilization
- High utilization is fully recoverable — it has no memory in FICO models
Credit utilization is the percentage of available revolving credit currently in use. If you have $10,000 in credit card limits and $2,500 in balances, your utilization is 25%.
The common advice to keep utilization below 30% reflects a general guideline. The actual scoring relationship is more continuous: lower utilization generally corresponds to higher scores, with the optimal range often cited as 1-10%.
Key fact: Utilization has no memory in FICO models. Unlike a missed payment (which stays on your report for 7 years), utilization is recalculated each scoring cycle based on current reported balances. Paying down a balance typically improves the score as soon as the new balance is reported.