What Is Credit Utilization (and Why It Makes Up 30% of Your Score)?

Intro

Credit utilization is one of the biggest factors in your credit score — but many people don’t even know what it is. Simply put, it’s how much of your available credit you’re using. The lower, the better.

👉 I always tell clients: utilization is the easiest lever to pull if you want to boost your score quickly.

🧾 What Is Credit Utilization?

• Formula: balance ÷ credit limit = utilization %.

• Example: $500 balance ÷ $2,000 limit = 25% utilization.

✅ Why It Matters

• Makes up ~30% of your FICO score.

• High utilization = lenders see you as risky.

• Low utilization = shows you manage credit responsibly.

📊 Best Practices

• Keep utilization under 30%.

• Under 10% is ideal for top scores.

• Pay balances before statement closes to show lower usage.

• Ask for credit limit increases to help lower the ratio.

👉 I like to think of utilization as “breathing room.” If you’re maxed out, your score suffocates. If you have space, your score breathes easier.

Final Thoughts

If you want a quick credit score boost, focus on utilization. Pay down balances, spread debt across cards, or request limit increases.

👉 In my opinion, this is the #1 quick win for credit improvement.