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

It's calculated both per-card and across all cards (aggregate utilization). Both matter, but aggregate utilization has a larger impact on your score.

• Under 30%: The commonly cited threshold. Going above this starts hurting your score.
• Under 10%: The sweet spot for the best possible score impact.
• 1–3%: Slightly better than 0%. Having a small balance shows you're actively using credit.
• 0%: Not harmful, but some scoring models prefer to see at least some activity.

Most issuers report your balance to the credit bureaus on your statement closing date — not your due date. This means even if you pay in full every month, a high statement balance will show high utilization.

The fix: Pay down your balance a few days before your statement closes. This is especially useful before applying for a new card or loan.

1. Request a credit limit increase. Same balance, higher limit = lower utilization.
2. Make multiple payments per month. Pay mid-cycle to keep the statement balance low.
3. Don't close old cards. They provide available credit that keeps your utilization ratio down.
4. Open a new card (strategically). More total credit = lower aggregate utilization.