What Is a Good Credit Utilization Ratio?

What Is Credit Utilization?

Credit utilization is the percentage of your available revolving credit that you are currently using. It is calculated by dividing your total credit card balances by your total credit limits across all cards.

Credit Utilization = (Total Balances ÷ Total Credit Limits) × 100

Example: if your combined credit card balances total $2,500 and your combined credit limits total $10,000, your credit utilization is (2,500 ÷ 10,000) × 100 = 25%.

Why It Matters for Your Credit Score

Credit utilization is generally considered one of the most significant factors in credit scoring models, second only to payment history. High utilization signals to lenders that you may be over-reliant on credit, which increases perceived risk.

The exact weight varies by scoring model, but reducing utilization is one of the fastest ways to see a meaningful improvement in your credit score — because it is updated every billing cycle as balances change.

This is general guidance. Credit scoring models are proprietary and vary between agencies. For information specific to your credit profile, check directly with a credit reference agency.

What Is Considered a Good Utilization Ratio?

General guidance cited by most financial sources:

• Under 30%: Widely recommended as a reasonable threshold. Most people with good credit scores fall at or below this level.
• Under 10%: Often associated with excellent credit scores. This is the level commonly seen among people with scores in the highest ranges.
• 0%: Using none of your available credit is not necessarily ideal — some activity signals responsible use. The goal is low utilization, not zero.
• Above 30%: May begin to negatively affect credit scores, though this varies by scoring model and individual credit history.

Per-Card vs Overall Utilization

Credit scoring models consider both your overall utilization across all cards and the utilization on each individual card. A single card maxed out at 90% can hurt your score even if your overall utilization is low.

Keeping each individual card below 30% — not just your combined total — is generally better practice.

How to Improve Your Credit Utilization

There are several practical ways to reduce utilization — these are informational suggestions, not personalised advice:

• Pay down balances: The most direct approach. Prioritise cards with the highest utilization first.
• Make multiple payments per month: Paying before your statement closing date reduces the balance that is reported to credit agencies.
• Request a credit limit increase: If your spending stays the same but your limit rises, utilization falls. This works best if you have a good payment history.
• Spread spending across cards: Rather than concentrating purchases on one card, distributing them keeps per-card utilization lower.
• Avoid closing old cards: Closing a card reduces your total available credit, which can increase utilization even if your balances stay the same.

Calculate Your Credit Utilization

Use our free Credit Utilization Calculator to enter your card balances and limits and see your overall utilization rate instantly.

For personalised credit guidance, speak with a qualified financial advisor or contact a credit counselling service.