Credit Utilization

Personal Finance
Updated Apr 2026 • Has calculator

Total credit card balances as a percentage of total credit limits — the second-largest FICO score factor.

What is Credit Utilization?

Credit utilization is the ratio of your outstanding revolving credit balances to your total credit limits. It is the second-largest component of the FICO credit score (30% weighting), after payment history. FICO considers both overall utilization and per-card utilization. Experts recommend keeping overall utilization below 30%, and ideally below 10%, to maximize credit score impact. Utilization updates every billing cycle when issuers report to credit bureaus.

Formula

Credit Utilization = (Total Balance ÷ Total Credit Limit) × 100

Worked Example

Worked example — FICO score optimization example — 2024

2024

Step 1  Card 1: $1,800 balance / $8,000 limit = 22.5%
Step 2  Card 2: $1,200 balance / $6,000 limit = 20.0%
Step 3  Card 3: $800 balance / $4,000 limit = 20.0%
Step 4  Overall: ($1,800 + $1,200 + $800) / ($8,000 + $6,000 + $4,000) = 19.0%
Step 5  Credit utilization = $3,800 ÷ $18,000 × 100 = 21.1%
Step 6  → Paying down to $1,800 total (10%) could boost FICO by 20–40 points

Source: FICO — Understanding Your FICO Scores (2024-01-01)

Calculate Credit Utilization

Sum of all revolving credit card statement balances

Sum of all credit card limits across all cards

Credit Utilization

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Not investment advice.

How to Interpret Credit Utilization

< 10
Excellent — maximizes credit score impact
10 – 30
Good — in the recommended range
30 – 50
Fair — some impact on credit score
> 50
High — significantly hurting your credit score
Sources
  1. FICO — Understanding Your FICO Scores
  2. Consumer Financial Protection Bureau — Credit Utilization
  3. Investopedia — Credit Utilization