How Credit Utilization Affects Your FICO Score

6 February 2026

When it comes to your credit score, few numbers matter as much as your credit utilization ratio. It’s one of the most misunderstood pieces of the credit puzzle, yet it holds a solid 30% weight in your FICO score. That's right—almost a third of your score is based on how much credit you're using. And the kicker? It's something you can control.

So, if you're working toward improving your credit score, or just want to understand what’s dragging it down, you’ve got to wrap your head around credit utilization. Let’s break it down in plain English.

What Is Credit Utilization?

Credit utilization is a fancy way of saying how much of your available credit you're currently using. It’s calculated by dividing the total balance on your credit cards by the total credit limit across all your cards. Then, you multiply that number by 100 to get a percentage.

For example:

Let’s say you have two credit cards. One has a $1,000 limit and the other has a $2,000 limit, giving you a total credit limit of $3,000. If you owe $600 total across both cards, your credit utilization ratio is:

$600 ÷ $3,000 = 0.20 → 20% utilization

Easy math, right?

Why Does Credit Utilization Matter?

Short answer: because the folks behind your FICO score—Fair Isaac Corporation—say it matters. And they’re not playing around. They’ve studied millions of credit reports and found a strong link between low credit utilization and better credit behavior.

But let’s think about it practically. If you’re using a big chunk of your available credit, it may look like you're relying too heavily on it. That could be a red flag to lenders. On the other hand, using just a small portion shows you can manage credit responsibly without living off it. That’s what they want to see.

The Magic Number: What's The Ideal Credit Utilization Ratio?

A lot of experts—and FICO themselves—suggest keeping your utilization under 30%. But if you really want to maximize your credit score potential, shoot for under 10%.

Here’s the breakdown:
- 0%–9%: Excellent
- 10%–29%: Good
- 30%–49%: Fair
- 50%–74%: Poor
- 75% and up: Very Poor

Sound harsh? It kind of is. But remember, this is one of the fastest parts of your score you can clean up. It’s not locked in stone.

How Often Is Credit Utilization Calculated?

Here’s where people get tripped up. Your credit utilization changes constantly—as you use your cards and pay them off. But your credit report (the thing FICO pulls data from) only gets updated when your credit card company reports your balance to the bureaus.

That usually happens once a month, usually around your statement closing date, not the payment due date. So even if you pay in full every month, if your balance is high when the report is sent in, it can hurt your score.

Pro Tip: Want to trick the system? Pay your balance down before the statement closing date. This way, a lower balance gets reported and your utilization stays in the green.

Single Card vs. Total Utilization: How Do Both Impact Your Score?

Most people don’t know this, but there are actually two kinds of credit utilization that FICO looks at:
1. Overall Credit Utilization – What you’re using across all your revolving accounts.
2. Individual Credit Utilization – What you’re using on each card.

Both numbers matter. If you have five cards and one is maxed out while the others are untouched, that maxed-out card can still drag your score down. It shows potential lenders that you might have financial struggles, even if your overall usage isn’t that bad.

So, the goal is to keep low balances across the board—not just in the total but on each card individually.

How Fast Can Your Score Improve by Lowering Credit Utilization?

Here’s some good news: changes in your credit utilization ratio can lead to quick results. Unlike other parts of your credit report (like late payments or collections), utilization updates monthly—sometimes even faster when you make a payment.

If you manage to pay down your balances and get your utilization under 10%, you could see a noticeable jump in your score within 30 days. We’re talking about anywhere from 10 to 100 points, depending on your profile.

Yes, really. That’s how much weight this factor carries.

What Happens If You Max Out Your Cards?

Maxing out your credit cards is basically the worst-case scenario for credit utilization. Even if you’re making minimum payments on time, being close to your credit limit sends a big ol’ “risk alert” to lenders and scoring models alike.

Why? Because it suggests you might be in over your head. And statistically speaking, people with high utilization are more likely to default.

So, if your goal is to qualify for better rates on loans or new lines of credit, you’ll want to avoid pushing your cards to the limit.

Should You Close Unused Credit Cards?

You might think, "Well, I don’t use that card, so I should cancel it, right?"

Not so fast.

Closing a credit card reduces your total available credit. And when your available credit drops, your utilization goes up—unless you also reduce your spending. That could hurt your score.

Example:
- You have $5,000 in available credit
- You carry $1,000 in balances (20% utilization)
- You close a card with a $2,000 limit
- Now you only have $3,000 available credit
- Your utilization jumps to 33%—just like that

So unless there’s an annual fee or another good reason, keeping older accounts open can help maintain your credit utilization and improve your score.

Strategies to Improve Your Credit Utilization Fast

Alright, time for some hands-on tips. If your score’s struggling due to high utilization, here’s how you can fix it:

1. Pay Down Balances Strategically

Focus on paying down credit cards with the highest utilization first—especially those near their limit.

2. Make Multiple Payments Each Month

You don’t have to wait for the due date. You can make several smaller payments throughout the month to keep your balance lower.

3. Ask for a Credit Limit Increase

This one’s a little risky—asking for more available credit might lead to a hard inquiry—but if you’ve had the card a while and use it responsibly, it’s worth a shot.

Bonus: You don’t actually have to spend more. The higher limit just helps your ratio.

4. Spread Out Your Charges

Instead of putting all your purchases on one card, spread them out to keep each individual utilization low.

5. Avoid New Debt

Obvious, I know, but taking on new balances will only make your utilization worse. Tighten the belt for a bit—your score will thank you.

Does 0% Utilization Hurt Your Score?

You’d think that having no credit card debt at all would give you a perfect score, right? Surprisingly, not always.

Scoring models like to see that you’re using your credit—but using it wisely. A 0% utilization might signal that you’re not using your credit at all, which can be just as confusing to lenders as maxing out your cards.

So instead of going totally dark, consider putting a small recurring charge on a card and paying it off monthly. That way, the account stays active, and your utilization remains low.

Final Thoughts

Credit utilization is one of those rare parts of your credit score you can actually do something about—often pretty quickly. It’s really about finding balance: using credit without abusing it.

Keep your balances low, your cards open, and your habits consistent. If you're mindful about how much of your limit you're using, you'll keep your FICO score in a safe zone, and lenders will see you as a lower-risk borrower.

Remember, your credit score isn't a measure of your worth—just a snapshot of how well you manage borrowed money. And credit utilization? That’s one of the clearest signs you’re handling it like a pro.