How much of your credit should you use?

Edited by:Liza Carrasquillo, Editor, Credit Cards
• Updated •5 min read • Leer en español
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Three young women shopping and discussing how much of credit you should useImage: Three young women shopping and discussing how much of credit you should use

In a Nutshell

Your credit utilization rate is the amount of credit you’re currently using divided by the total amount of credit you have available. Experts recommend keeping this rate under 30% if you’re trying to build or maintain a good credit score.
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To avoid potential damage to your credit scores, you should aim to use no more than 30% of your available credit. So, if you have a credit card with a $1,000 limit, try to keep your balance under $300.

Using a large amount of your available credit may suggest to lenders that you might be overextended or have trouble repaying debt, which can negatively impact your scores. That’s why credit utilization, or the amount of credit you’re using compared to your total available credit, is one of the most important factors in calculating most credit scores.

You can check your credit utilization rate with Credit Karma, which provides free VantageScore® 3.0 credit scores and reports from two of the three main credit bureaus: TransUnion and Equifax.

What is a credit utilization ratio?

Your credit utilization rate (or ratio) refers to the relationship between the available credit limits from your revolving accounts and the balances you’re carrying across those accounts. Revolving accounts typically include credit cards and other personal lines of credit, not installment accounts like mortgages or personal loans. 

But, you don’t have just one credit utilization rate. To help lenders assess risk, credit scoring models like those from FICO and VantageScore look at credit utilization from individual accounts, as well as credit utilization across all accounts. 

 Generally, using less of your available credit is better for your credit scores.

What factors affect your credit utilization ratio?

Your credit utilization ratio isn’t based on just one number. Different credit scoring models calculate it differently, depending on the types of accounts they include and the factors they weigh. Here are a few things that can affect your utilization:

  • Total available credit: The sum of the credit limits on your revolving accounts.
  • Outstanding balances: Your balances indicate how much you owe on your revolving accounts.
  • Closed accounts: FICO and VantageScore treat these differently. VantageScore generally doesn’t include closed accounts in utilization calculations, while FICO might include a closed account that still has a balance.
  • Type of account: Some VantageScore models consider home equity lines of credit (HELOCs) when determining utilization, while FICO models generally do not.
  • Timing of reporting: Credit card issuers often report your balance to the credit bureaus at the end of your statement period, not necessarily when you make a payment. If you pay after the statement closes, a high balance might still be reported.

How to calculate your credit utilization ratio

To estimate your credit utilization ratio, follow these steps:

  1. Add up your balances: Total the current balances on all your revolving credit accounts.
  2. Add up your credit limits: Total the credit limits for those same accounts.
  3. Divide total balances by total limits: This gives you a decimal number.
  4. Convert to a percentage: Multiply that decimal by 100 to get your utilization percentage.

Doing all of this would mean following this basic formula: 

(Total of balances / Total of credit limits) x 100 = Your credit utilization percentage rate

For example, if you have a credit card with a $1,000 limit and a $500 balance when the information is sent to the credit bureaus, your calculation will look like this: 

$500 / $1,000 = 0.50. 

Multiplied by 100, your credit utilization ratio is 50%.

What is a good credit utilization ratio?

Experts generally recommend keeping your credit utilization rate below 30%. You may see your scores dip if you use more than that. But there’s is no single cutoff used by every credit scoring model, and some newer models also take into account trends in your credit utilization over time.

While staying under 30% is a good rule to follow, using less can be beneficial. People with excellent credit scores often maintain utilization rates in the single digits.

Having 0% utilization isn’t necessarily the goal, however. Using some credit is how you demonstrate to lenders that you can actively use and manage credit, which can be beneficial for your score. 

How much of my credit limit should I use?

If you want to keep your scores healthy, you should generally try to use as little of your available credit as possible. 

It’s also important to manage your utilization both overall and on a per-card basis. High usage on a single card can negatively affect your scores even if your total utilization across all cards is low. To decide how much of your credit limit you should use, follow these steps:

  1. Find out the credit limits for all your credit cards and personal lines of credit.
  2. Look at your statements to see your balances and how much you’re spending on the accounts each month.
  3. Calculate your credit utilization per card and overall.

If you’re consistently using above 30% of your available credit each month—on individual accounts and overall—consider cutting back on your credit usage if possible.

How to improve your credit utilization ratio

If your utilization rate is higher than you would like, there are steps you can take to manage it. Here are a few ways to potentially improve your ratio:

  • Pay down balances: Reducing the amount you owe is the most direct way to lower your utilization.
  • Request a higher credit limit: Increasing your total available credit can lower your ratio, provided you do not increase your spending. Some credit card issuers will consider raising your credit limit at your request, especially if you have a higher income or less debt than when you opened the card. 
  • Keep accounts open: Closing an account reduces your total available credit, which can cause your utilization rate to spike. Keeping accounts open can help maintain a lower ratio, even if you don’t use that account often. 
  • Avoid maxing out cards: Try to spread out purchases or payments to avoid reaching the limit on any single card.
  • Open a new card: Opening a new account increases your total credit limit, which can lower your overall utilization. 

Next steps: Monitor your credit utilization

Once you’ve taken steps to lower your credit utilization, you’ll want to keep it as low as possible. Other factors, like payment history and total accounts, are also important for improving your credit scores over time.

You can monitor all your credit factors—including your credit utilization—by checking your free VantageScore® 3.0 credit reports from TransUnion and Equifax on Credit Karma.

FAQs about credit utilization

Using 90% of your available credit can signal repayment risk, which may lower your credit scores. If your utilization is usually much lower, a sudden spike can have a bigger impact—especially if your score is high. Your scores may rebound once you pay down the balance and reduce your utilization.

Yes, closing a credit card can affect your utilization rate because it reduces your total available credit. VantageScore models generally exclude closed accounts from utilization calculations, but FICO models might include them if they still have a balance.

Using 50% of your credit limit isn’t necessarily bad, but it can negatively affect your credit scores. Credit scoring models generally favor lower utilization, and using half of your available credit may signal higher risk to lenders. Keeping your utilization below 30% can help support stronger scores.