Optimize your credit score by managing your balances and credit limits effectively across all your accounts.
Credit utilization is the ratio of your outstanding credit card balances to your total available credit limits. It is a major factor in determining your credit score because it shows lenders how much of your available credit you are using at any given time.
Lenders look at both your overall utilization across all accounts and your per-card utilization. Even if your total ratio is low, having one card near its limit can negatively impact your score. Keeping your balances well below your limits demonstrates responsible credit management.
Strategies for maintaining a healthy credit profile through utilization management.
Lower utilization ratios typically correlate with higher credit scores as they signal lower risk to lenders.
Maxing out a single card can hurt your score significantly, even if your other cards have zero balances.
Paying your balance before the statement closing date can result in a lower utilization being reported to bureaus.
Requesting a credit limit increase without increasing your spending is a fast way to lower your utilization ratio.
While staying under 30% is a common rule of thumb, those with the highest credit scores typically keep their utilization under 10%.
Utilization has no memory. Once a lower balance is reported, your score can recover in the next reporting cycle.
Generally, no. Closing a card reduces your total available credit, which can cause your utilization ratio to spike if you carry balances elsewhere.
Most lenders report your balance once a month, typically on or shortly after your statement closing date.
No. You do not need to pay interest to have a good score. Paying your balance in full every month is best for your finances and your credit.
If you pay after the statement closes, that high balance might still be reported. Try paying a few days before the statement date to show low utilization.