Credit Utilization

Personal Finance

Credit utilization is the percentage of your available credit you're currently using on revolving accounts (credit cards). If you have a $10,000 limit and a $3,000 balance, your utilization is 30%. FICO penalizes utilization above 30% on individual cards or across your total credit. Keeping utilization under 10% is the sweet spot for high scores. The metric resets when card balances are reported to bureaus, which is usually around the statement closing date — not the payment due date. Paying down before the statement closes (not just before the due date) is the trick to optimizing your reported utilization without changing your spending habits.