The Real Impact of Credit Utilization on Your Score

Credit utilization accounts for 30% of your FICO score, yet most people misunderstand how it works. Let's break down the facts and show you how to optimize your utilization for maximum points.

What is Credit Utilization?

Credit utilization is the percentage of your available credit that you're currently using. For example, if you have a $10,000 credit limit and a $3,000 balance, your utilization is 30%.

Overall vs. Per-Card Utilization

FICO calculates utilization two ways:

• Overall utilization: Total balances divided by total limits across all cards
• Per-card utilization: Individual card balance divided by that card's limit

Both matter, so you want to keep both low.

The Magic Numbers

• 30% or below: Good - won't hurt your score significantly
• 10% or below: Excellent - helps your score
• 0%: Not always best - showing some usage is better than none
• Above 50%: Danger zone - serious score damage

Timing Matters

Credit card companies report your balance to bureaus on your statement closing date, not your due date. Pay down balances before the statement closes to show lower utilization.

Quick Utilization Optimization Strategies

1. Pay your balance twice a month (before statement close)
2. Request credit limit increases (without hard inquiries)
3. Keep old cards open to maintain total available credit
4. Spread charges across multiple cards instead of maxing one out
5. Use balance transfer cards strategically

See Your Potential

Use OriumAI's credit score forecasting tool to see exactly how lowering your utilization could affect your score. Small changes can mean big point gains.