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Every credit score improvement article suggests that consumers should not have a high credit card utilization rate. (Defined as: total credit card balances / total credit card limits). Often the recommendation is the lower the credit card utilization rate, the better the credit score. Experts also suggest that the credit card utilization rate should never exceed 35%.
At Credit Karma, we think it is important to provide both the recommendation and the reasoning behind the recommendation. To put this tip to the test, we took a random sample of 70,000 credit scores, the corresponding credit card utilization rates, and graphed the results. The findings are very telling and support the claim that with credit card utilization the lower the rate, the higher the score – except for 0% utilization.

FINDINGS
The data and chart do suggest there is strong correlation between a consumer’s credit card utilization rate and their credit score. The lower the credit card utilization, the better the credit score generally speaking.
There is one exception in this recommendation. At credit card utilization rate of 0%, the average credit score for this group is actually much lower than at the 1-10% (742 vs. 667). People with 0% credit card utilization could fall into 2 categories.
With the results in mind, it would be unproductive to suggest not carrying a balance at all since this is a primary benefit of credit cards. The reality is that many consumers need the convenience of revolving debt from credit cards. Keeping this mind, we suggest keeping your balance lower than 35% on all your credit cards and making sure you pay on time and the debt is something you can manage.
THE WRONG CONCLUSION
For the casual reader, it is important NOT to infer that credit card utilization rate is the only driver of credit scores. In reality, there are hundreds of attributes (we plan on sharing many more). These numbers represent the average, meaning that a person with high credit card utilization can still have a good credit score if the other variables are positive.
It is also noteworthy that there may be other factors that make high credit card utilization such a telling statistic. For example, an individual with high credit card utilization may only have credit cards as their only credit vehicle suggesting that they are indeed more risky. Or perhaps the high credit card utilization is a result of a credit card company reducing their credit limit because the individual is taking on too much debt. In many ways, credit troubles can build on itself so it is best to always actively manage your credit and make responsible use of the credit and credit access you have.
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Excellent advice. Thanks I will be back and spreading your great website with my business associates.
turtlecam 1 year ago
I charge everything on my reward credit card and pay my balance in full every month. Sometimes the balance is in the thousands and if my credit is pulled at that time, my score drops. There is no record that I pay the bill in full. Also, my income is not known and so I believe my score is lower than it should be. IS there a way to circumvent that?
excelsior 1 year ago
Income is not factored into your credit score so that won't matter. As for you monthly spend, if your credit card limits are high enough, that won't matter either. However if your limits are $5,000 and you charge $4,000 each month then your score might be artificially low.
CK Moderator
Great info. Thanks for the insight.
internate 1 year ago
I had a credit score in june of 09 at 584. i applied through four different people to help rebuild my credit in a home building process. Now when i checked the infor from credit karma it shows credit score of 573. Is this information accurate coming from transunion? Also, when opening up new credit card accounts how long will it take for your credit score to go up if you are paying tour cards on time?
chrisf 1 year ago
The amount of time depends on your specific details. You can try our credit score simulator to get more details.
CK Moderator
my score is in the mid 700's and all grades are A except this utilization one which is an F. I confused as I pay off my cards monthly of course and only significantly use amex or MC. I dont nearly hit my limits or even use 90% of my cards. thoughts
sdlkc1 1 year ago
Credit card utilization is based on the amount of debt at a given point in time. The fact that you pay in-full each month is not distinguished. Chances are your score could see an increase if you added a credit card or increased your existing credit card limit.
CK Moderator
What credit bearu score am I lookinga t on this site. Is it the middle score that the lenders look at? It seem as though the other score do not matter I am trying to get a home loane my other two score are 590 and middle is 533. Even though the other two scores are higher they go by the middle score is this what I looking at on this site?
chinatiny 1 year ago
TransUnion
CK Moderator
I am planning on buying a house late this year, so I pulled my credit and was shocked to find my score much lower than I would expect. It turns out that 2 of my 3 cards do not provide my credit limit to the credit agencies. This has made by utilization look high and available credit look paltry. They will be hearing from me on a daily basis until they get their act together :-)
raymoore98 1 year ago
Our current amount owed by HSBC is $4,000. If we send them in $2,000 will that raise our credit score quickly? They have also lied and said we were 60 days past due when we never were and it dropped our credit score by 30 points!!!!!!!!!!! We definitely do not recommend them.
aprilkeckler 1 year ago
It really depends on how much of your credit you are currently using. Try the Credit Simulator to get a sense of the change.
CK Moderator
Having open credit card accounts you rarely use or need may raise your credit score but it also increased your exposure/risk to identity theft.
lennyschafer 1 year ago
My credit score on 8/29/09 was 785. My "Total Accounts" Grade was "D". What do I do to move this grade higher?
jlarocca 1 year ago
That is a very strong score. With it, you should get the best rates available. Over time, your total accounts should increase with more credit experience.
CK Moderator