What Is a Good Credit Utilisation Ratio? How to Calculate and Improve Yours

A good credit utilisation ratio is below 30% — and below 10% is ideal for maximum score benefit. Utilisation is the percentage of your total revolving credit limits that you are currently using: $2,000 balance on a $10,000 limit card is 20%. It is the second most influential factor in your FICO score after payment history, accounting for approximately 30% of the score.

What is a good credit utilization ratio

1. Calculate overall utilisation — add all card balances, divide by total credit limits across all cards. Example: $3,500 in balances across $20,000 in limits = 17.5%.
2. Check per-card utilisation — a single maxed-out card hurts your score even if your overall ratio is low. Each card is evaluated individually and in aggregate.
3. Target below 30% — lenders view 30%+ as a sign of credit stress. Scores begin to drop meaningfully above this threshold.
4. Target below 10% for maximum score — the highest-scoring consumers typically use 1–9% of available credit, not 0%. Zero utilisation is slightly less optimal than minimal positive use.

How utilisation affects your FICO score

Utilisation has a direct, near-immediate effect on credit scores because it is recalculated every month when issuers report to the credit bureaus. Unlike payment history (which can take years to recover from a missed payment), utilisation can be improved within 30–60 days simply by paying down balances.

Overall vs per-card utilisation

FICO scoring evaluates both your overall utilisation (all balances ÷ all limits) and your per-card utilisation (each card's balance ÷ that card's limit). A single maxed-out card at 95% utilisation damages your score even if your other cards are at $0.

Example: You have three cards with a combined $30,000 limit. One card has a $9,000 balance ($9,000 ÷ $15,000 = 60% on that card). The other two cards are at $0. Your overall utilisation is $9,000 ÷ $30,000 = 30% — borderline acceptable. But the single card at 60% will drag your score more than the overall ratio suggests. Both metrics matter.

Worked example: improving utilisation before a mortgage application

Imagine you are applying for a mortgage in three months. Your current credit position:

Overall utilisation is 30.5% — just over the threshold. Card A at 52.5% is the biggest problem. To get into the ideal range (<10%), you need to pay down $4,100 total — bringing balances to $2,000 combined ($2,000 ÷ $20,000 = 10%). Even getting Card A below 30% ($4,200 → $2,400, a $1,800 payment) will meaningfully improve your mortgage rate.

How to lower your utilisation quickly

• Pay before the statement closing date. Your issuer reports the balance shown on your statement to the bureaus, not your payment due date. If you pay down a card before the statement closes, the lower balance is what gets reported.
• Make a mid-cycle payment. If you cannot pay the full balance, even a partial payment before the statement date reduces the reported balance.
• Request a credit limit increase. A higher limit on the same balance directly reduces utilisation ratio. Requesting a limit increase may trigger a hard inquiry — time it carefully relative to any upcoming loan applications.
• Keep old cards open. Closing a card permanently removes that credit limit from the denominator, raising overall utilisation on your remaining cards.
• Spread balances across cards. Keeping one card below 10% while another is at 50% is worse than spreading $X across all cards at 25% each. Balance distribution matters in addition to the overall ratio.

Authoritative sources

• FICO — Amounts Owed (Credit Utilisation) — Official FICO documentation on how credit utilisation is calculated, why it comprises approximately 30% of the FICO score, and the factors evaluated within the "amounts owed" category.
• Consumer Financial Protection Bureau — How to Get and Keep a Good Credit Score — The CFPB's guidance on credit utilisation, payment history, and the practical steps that most reliably improve credit scores over time.

Key takeaways

• Credit utilisation is the percentage of your revolving credit limits you are using. It is calculated both overall (all balances ÷ all limits) and per-card (each card's balance ÷ its own limit). Both metrics affect your FICO score.
• Below 30% overall is the widely-cited threshold. Below 10% — ideally 1–9% — produces the maximum score benefit. 0% is slightly suboptimal because there is no active usage signal for the scoring model.
• Utilisation is recalculated monthly when issuers report to the credit bureaus. Unlike a missed payment, high utilisation can be fully reversed within 30–60 days by paying down balances before the statement closing date.
• A single maxed-out card hurts your score even if overall utilisation looks acceptable. Spreading balances evenly across cards is better than concentrating debt on one card.
• Before applying for a mortgage or major loan, spend 1–3 months paying down card balances to get each card below 30% and overall utilisation below 10%. The credit score improvement often translates directly into a lower interest rate offer.
• If high balances persist because of revolving debt accumulation, the root cause is worth addressing: consolidating credit card debt can lower the interest rate, reduce the total balance faster, and free up available credit — all of which improve utilisation.

Frequently asked questions

Does closing a credit card affect my credit utilisation ratio?

Yes — closing a card reduces your total available credit, which raises utilisation on your remaining cards if balances stay the same. Example: $3,000 balance across $15,000 total limits = 20% utilisation. Close a $5,000-limit card with no balance and utilisation jumps to 30% ($3,000 ÷ $10,000). If you are planning a loan application, do not close cards shortly beforehand.

How quickly does paying down a balance improve credit utilisation?

Most card issuers report balances to the credit bureaus once per month on or near the statement closing date. After you pay down a balance, the updated lower utilisation will appear in your credit report within 30–45 days — typically in time for the next monthly reporting cycle.

Should I keep old credit cards open even if I do not use them?

Yes, in most cases. Open cards with no annual fee contribute available credit, which lowers utilisation and increases average account age — both positive score factors. Set a small recurring charge (streaming subscription, for example) to keep them active and avoid issuers closing them for inactivity.

Does a 0% utilisation rate hurt your credit score?

0% utilisation — paying all cards to $0 before the statement date — produces a slightly lower score than 1–9% utilisation. FICO scoring rewards active, responsible revolving credit use. The practical solution: allow one card to report a small balance each month, then pay it in full by the due date.

Does my credit utilisation reset every month?

Yes — it is recalculated every month when your issuers report current balances to the bureaus. There is no memory effect: a month at 60% utilisation is fully offset the next month if you bring balances down to 10%. This makes utilisation the fastest-moving variable in your credit score.