Credit utilization
The percentage of your credit limit that you're currently using.
Credit utilization is the ratio of your outstanding card balance to your total credit limit. If you have a $5,000 limit and you owe $2,500, your utilization is 50%.
US credit scores (FICO and VantageScore) reward low utilization. Common thresholds:
- Under 10% — best
- 10–30% — good
- 30–50% — slight drag
- Over 50% — significant drag
It's measured both per-card and across all your cards. Maxing out one card while keeping others at 0 still hurts.
The timing detail most people miss: utilization is calculated from the balance on your statement closing date, not the balance after you pay. So if you regularly carry a balance during the month and pay it off after the statement, the credit bureau still sees a high balance. Paying before the statement closes is the trick.
Example
A $10,000 limit with a $3,000 balance = 30% utilization — usually the threshold above which credit scores start to drop.
Why this matters
It's the second-biggest input to your FICO score (after payment history) and the easiest one to game upward in a single billing cycle.
The catch
The score sees whatever balance is reported to the bureau, not what you carry month to month. Pay off your card *before* the statement closes, not after, and your reported utilization can drop overnight.