What is credit utilization and why it matters

Utilization is your card and line of credit balances divided by your total limits.

Key points

• Keeping utilization under 30% is a common rule of thumb; under 10% tends to score best.
• Utilization is reported from your statement balance, so paying before the statement date can lower it.
• Closing an old card lowers your total limit and can push utilization up.

What to do next

Use the utilization calculator on the Money tools page to see how much to pay down to reach each threshold.