Utilization compares what you owe with what you can borrow. Here is how to calculate it and lower it.
Updated November 2026
What credit utilization is
Credit utilization is the share of your revolving credit limits that you are using. Scoring models consider it, and lower is generally better. The CFPB glossary has plain-language definitions of credit terms. Use the credit utilization calculator for your own cards.
The formula
Lenders and models often look at the overall ratio and at each card separately.
Worked example
| Card | Balance | Limit | Utilization |
|---|---|---|---|
| Card 1 | $2,400 | $5,000 | 48% |
| Card 2 | $900 | $3,000 | 30% |
| Card 3 | $0 | $2,000 | 0% |
| Total | $3,300 | $10,000 | 33% |
To bring the overall ratio to 30 percent, balances must fall to 30% x $10,000 = $3,000, a paydown of $300. In Excel: =SUM(B2:B4)/SUM(C2:C4) for the ratio and =SUM(B2:B4)-0.3*SUM(C2:C4) for the paydown.
Is 30 percent a rule?
No. Under 30 percent is a commonly cited guideline, not a rule, and no specific number guarantees a score. Models differ, and what matters is the balance reported to the credit bureaus, which is usually the statement balance.
Ways to lower it
- Pay down the card with the highest utilization first.
- Pay before the statement closing date so a lower balance is reported.
- Ask about a limit increase, but only if you will not spend more.
- Keep old cards open if they have no fee, since closing one lowers your total limit.
If interest is your concern, see the credit card interest calculator and the minimum payment calculator.
These are illustrations to help you plan, not financial advice.
Frequently asked questions
How do I calculate credit utilization?
Divide total card balances by total credit limits. $3,300 / $10,000 is 33 percent.
What is a good utilization rate?
Lower is generally better. Under 30 percent is a commonly cited guideline, not a rule.
Does paying before the statement date help?
It can, since many issuers report the statement balance to the bureaus.
Does closing a card hurt?
It lowers your total limit, which can raise utilization.