The Relationship Between Your Credit Score and Credit Card Utilization Rate

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The Relationship Between Your Credit Score and Credit Card Utilization Rate

Credit card utilization is one of the most important factors credit scoring models use to calculate your credit score. You can figure out your utilization rate by dividing your total credit card balances by your total credit card limits.

To illustrate how important this factor is, Credit Karma sampled approximately 15 million Credit Karma members who visited the site in 2014 and compared their credit scores and corresponding credit card utilization rates.

Credit Score Chart


The graph above suggests that there is a strong correlation between credit card utilization rates and credit scores. Generally, those who had a lower utilization rate had a higher score and vice versa - with an exception for those with 0 percent utilization. The average credit score of those who had a utilization rate of 0 percent was actually lower than the average score of those who had a utilization rate of 1-20%.

What Does This Mean?

Lenders don't like high utilization rates because it tends to indicate there's a higher chance of you not being able to repay your debts. Keeping your credit card utilization low, preferably under 30%, is a good goal to aim for. Our data suggests an even better goal is to use your credit some, but keep the utilization rate under 20%. Creditors want to see proof that you can manage credit wisely--something you can't do without using the credit you're granted.

If you're uncomfortable with the idea of using your card for large purchases, you can still show an active credit profile by paying for small items with your card. It's important that you practice good habits when managing your credit cards. Charge what you can pay back and make sure your payments are on time. In order to keep your utilization rate greater than 0%, you'll need to let your charges show up on your billing statement, and then you can pay it off in full. This does not mean you need to carry a balance from one month to the next--doing so may just cost you money in the form of interest.

One of Many Potential Factors

Your credit card utilization rate is an important part of your credit profile and will likely have a significant effect on your credit score, but it's not the only factor lenders care about. The data and graph above represent the average, meaning it is possible for a person with high credit card utilization to still have a good credit score if other factors are positive-- it's just not as likely to happen. You can monitor your credit card utilization rate (and more!) for free at Credit Karma.

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Wow, so many useful scenarios, thanks for sharing everyone!

Personally, I have improved my score by 120+ points in the last 10 months using credit karma. I realized they wanted less credit utilization so I applied for 4 cards with high credit limits. My limit is so high I do not think I could consciously spend more than 20%.

My technique is charge everything to my cards and do a bank transfer to pay most of it off. I keep my grace periods in mind. I pay everything off before it accrues interest but keep enough balance to show 2% utilization. So far it's working out for me, I currently have a 740 and 750. That is about as high as I have ever had it. I'm really glad I am able to keep an eye on it. If you’re starting out don't be discouraged, I had to log in every week and check for positive reinforcement and negative outcomes before I reached a "credit behavior schedule" that gave me results. Yes, I said schedule, this is a serious routine!

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I once read an article about a guy who was in charge of his company's credit card. They always paid their balance off in full each month, this resulted in an unimproved credit score for the company. It's not credit if you pay in full each month, just borrowing. He said that the compnay couldn't get a loan if their life depended on it due to a lack of credit history. So, I have always left between 5%-20% of my total credit limit at the end of each month (although I could very well pay it completely off), just so that credit companies see that I can borrow but then pay back the money responsibly. Hope this helps :b BTW I have grade A in credit utilization (20% utilization) with this method.

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This was most helpful to me because I was on a mission to payoff all my credit cards & did. My credit score & utilization grade dropped & I didn't understand why but I do now. So I will make little purchases & pay them off when the bill comes in.

Great tip. Thanks Credit Karma

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Paying them off every month doesn't help as much as almost paying them off every month, just before the bill is printed.  For one of my cards, the bill comes on the 10th and is due the next 5th. I use it for some, not all, purchases I would've made anyway, gas groceries, etc. On payday (1st) I pay an amount that is more than the previous statement balance but less than the current balance. It's paid on time, I don't get charged interest, and there's small balance on the next statement. Credit cards are the only bills I don't pay as soon as I get them. I pay them near completely on the next payday, a few days before they're due.

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After great level of hardship in these past years Im very confident on reaching back to my great credit statanding... Credit Karma is definitely the tool to have to achive these great credit goals. Thanks Credit Karma!! YOU ROCK!

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I have three credit cards. I called up all three CC companies and confirmed that the date in which they report to the credit agencies is either the last day of my billing cycle (not due date) or the day after.

I synced all my credit card billing cycles and always pay off all my balance before the end of the billing cycle, thus showing 0% utilization to the credit agencies.

I think the information you gave out is incorrect. One of the card companies have told me that they report my last payment date and the amount which means that the credit agencies are well aware of the fact that I am using my credit card and the utilization is showing 0% only because I pay them all up each month.

I signed up for credit watch on and they say that my low credit utilization (0%) is helping my credit. Please let me know whether your information says I'm right or wrong.

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Well, thanks to so many great sites like Credit Karma with such great tips, I've been helping friends, family and myself improve credit scores. I must share one tip in an article that I found on a different site really enlightened me or, at least it looks like it did. I've seen most websites posts stating, "keep it under 30% utilization." Well, I called up a few credit card companies and they said, no, just use your credit as much as you want, pay it off at the end of the month or make the minimum payments and you're fine with us. So, here I'm thinking, what's really true to get the best score and almost max out the card and pay it off monthly to demonstrate that you can handle $xxx payments a month, in hopes of getting a higher limit faster? I was thinking with lets' say $1,000 limit and only charging $100 for x months and asking for an increase might be silly. Well, going back to that great tip I think I found... The "credit expert" advised something that I haven't seen on any other website/book. She said, fine, run it up high if you want however, pay it off within enough days of closing to make sure that you're 1 to 10% of utilization. This way you're showing that you can handle higher level of charges and responsible enough to pay it off in about 30-45 days. The rest of the remaining 1-10% you can pay off after the statement closes. Okay, I tried it and yes, it works. Credit card companies usually post the closing balance onto the credit reports. I've been testing this theory with friends, family and my scores and, it works! ;)

It really depends on the day the the credit card companies report and your cycle date.

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It is best to utilize less that 10% of your card and have your account set to automatically pay the entire balance monthly.

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I have been using the same trick as you have found out of maxing out your CC and paying it off before due date. And it has definately helped. At a point where chase was denying me of Chase freedom i applied BOA CC with CL of $2000. Maxed it and payed it. Maxed it again paid it again. The complete amount before due date.

Three months later i apply for chase freedom again and this time they approve me for $6000 came to me as surprise (in less then three months with average age of accounts 1 year 1 month thats all)

So yes it definately works, cuz now you show you are a high roller but just before the due date you drop the utilization rate to lower than 10-20%.

But where this trick failed (not exactly) and as corrctly mentioned by Credit Karma Moderator. It depends on the days the credit card companies report, cuz as i was following this i was late in paying by a day. Mind it i did not cross the due date it was like a day or 2 days before the due date. But i guess within that one day my CC companies reported to Transunion and others with a maxed out balance. This made my Credit score to drop. So from a usage rate of below 10% to usage rate of 60 and above affected my score. (Again, i did not cross my due date.)

Its just my CC company reported just before i payed the amount. The companies do not have a fixed day to report neither do they report after your due date. It fluctuates though not to much but a day or two.

So nothing wrong with this tip. Great one actually just letting you know what happened to me. 

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Yes, I kind of don't like that I'm supposed to keep a 1-10% balance on my card.  I have two credit cards with a total of $57k credit limit.  I only use one of the cards.  My monthly charges on the card range between $4k and $12k.  However, I've been paying ahead of the charges to the tune of about $4k.  I always have a positive balance on my credit card because of this pre-paying.  I thought that If I kept a zero (or in my case a positive) balance, that would help my credit score (which has been 768 for the last six months).  I guess I'll have to leave 1% balance on the card.

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I know on what day my credit card companies post to the credit reporting agencies and I pay them off in full every month at least 3 days before the posting date so I show a low utilization.

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well, NJChas's iv'e been watching my credit score & the one problem is, im only using whats nessesary and paying it off in a timely manner. well, the last report from credit karma did not post my utilization of cc, it said 0% utilization which was not correct. which lead to the utilization of card to drop points. now, what im trying to figure out is; who would be the one who missed my spending the credit card co. or credit karma???

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Of course the Credit Card Companies are going to tell "charge it on up" and pay it in full or the minimum.  They have learned from experience, roads leading to Rome are not paved in gold for too long.

You intend to pay it in full each month, the car needs tires..."charge it", you'll pay it off in full next month, but then the A/C in your home goes out...put it on the card", I'll divide the cost by 6 months. 

In the 3rd month your child needs Braces to the tune of $6000.  Yep! Rip the ol' card out of your wallet and because this is a emergency, you'll stretch it out for 12 to 18 months...but nothing else is to be charged with that Mastercard, right! 

Hello Visa!  I have a lawnmowe, edger and weedeater to put on you, but I'm going to pay it off in full as soon as the bill comes......Most debters have a relative named Murphy whom seems to visit them a lot.  He even lives in their spare bedroom in some cases.  This scenario goes on like this for 4 or 5 years and one day you wake up, go to the mailbox and open the Mastercard, Visa, Discover and Sears and can't believe what you see!   You owe $40,000 to $50,000.!  I know because I have been there. Mine was $57,000 4 years ago. Now I'm down to $9400 at 3.92%.  Minimum payment is $125, but I pay $300 every month and will have it paid off in about 28 months.  I have not charged anything on the card since I've had it, just paying down a few balance transfers from 0% to 10.24%, but $6750 of it is at 2.99% until paid off.  The blend rate on the $9400 is the 3.92%

I have 5 other credit cards with 0 balances.  I don't use them but don't want to affect my FICO and Utilization rate by closing them.  Hope this gives ya'll something to ponder.

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Two things are important



Mostly there is 2-5 days between due date and closing date. Closing date always comes after due date.

to get rid of intrest, u have to pay all balance til DUE DATE. But after u paid off all balance in ur credit card and if u wait till closing date (as i said 2-5days), ur bank will report ur balance $0. Which is %0 utilization rate. This is PROBLEM. Ur score will go down.


Pay off all your balance till DUE DATE to get rid of intrest.

Purchase small amount Right after u paid off all balance

and WAIT..... til CLOSING DATE for ur bank doing that u will keep your utilization rate %1-10 ...which is GREAT for ur score improvement


Discover card with $1000 credit limit

DUA DATE: 6th of every month

CLOSING DATE: 11th of every month

Spend how much ever u want, lets say u spent $983

Paid $983 til DUE DATE (6th of month).....GOOD for u...because $0 intrest

but dont wait with $0 balance in ur discover card. Otherwise bank will report u %0 utilization

Paid ur bill which is small amount..lets say $65

WAIT now til CLOSING DATE (11th of month)....GOOD for u...because u will be reported %6 utilization

Then enjoy your NEW RAISED CREDIT SCORE :)))

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True Story Short,

I Went Up 93 points in 4 months and no interests paid (all learned on Ckarma blog i applied and it worked.)

To keep it simple i will explain,

I have Score 632 in October 2013 no credit cards (have a few cc in the past but they were closed more than 6 years ago... not so smart)

For the last 12 months paying on time my car and student loan i was able to go up maybe 20 points in an entire year.

Then i get approved for a hight interest 23% card $500 credit limit on october 2013,

i used 4 or 5 times monthly to buy things that i already have the money to pay for and need.

I pay off every month the entire amount borrowed with CCard within 21 days or less.

After 3 months my credit go up only 6 points and my card limit were increase from $500 to $900

I just continue to repeat the same process month after month then happens the unexpected.

in April 29 (only 4 months after my last score go up only 6 points) 

My Score Went Up 93 Sweetest Points Ever. with 0 cents paid on interests!

Now i have 731 score.

Note: The important detail here other than paying off on time is to keep the total amount used on credit card BELOW 20%

in my case i always has only 10% or less. If i have $900 in the card i will never had more than $90 at once.

only after i paid all $90 then i allowed myself to buy again up to $90.

Try it, im sure it will help you a lot and will make you feel happy, productive and excited, and will take your self esteem thru the roof.

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Helpful to 10 out of 12 people

 OK I'm confused.  IAve a 787 score yet a "C" for utilization.  IHAev one card i genrally use and pay off each onth usually still have a small balance at the time the statement is created.  I have another card i use when i cant use AMEX which is sledom..i pay that card off as well.  I have 4 other major cards that i do not use.  how do i get rid of  a "C" score??  use the other card and pay them before or after the statment is created?  I REFUSE to pay interest to credit card companies.

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I have the same problem. I have a 755 score, buyt I have a "C" utilization score, too. It also says that my avg balance on one card is 21% utilization, which is wrong. It's much lower and I pay it off prior to due date each month. 

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use it an dpay it off BEFORE the statement date.  and the "C" is from being in the center of the min. and max. scores.  500-990  if your score is around 750 (give or take) you will have a "C" rating. see??? (lol...sorry...had to add that at the end)

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Ok guys here's the deal. You cant pay you balance off in full on every card before the statement is generated because it will show a zero balance. Yes, you will avoid interests charges but you have to realize what a %0 utilization looks like to a potential creditor. The whole point of a credit score is to show credit worthiness to someone who doesn't know you from Adam. You must make it look like you use your credit cards responsibly and the only way to do that is to carry a balance every month otherwise it looks like you don't use it at all, this in turn mean you will incur some interest charges. Keep the balance low around %5 let say and your interest charges will be low but you will have a "A" grade for credit card utilization which means you score will go up!!

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Is the credit utilization your total credit or is it based of each credit card?   Say for example my total credit utilization is 15% but most of it is on one credit card which is say 60% would that 60% affect it even though its one credit card?   Love credit karma and keep coming back every week.

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