What Is Credit Utilization?
Credit utilization is the percentage of your available credit you are currently using, and it is one of the biggest factors in your credit score.
If you have a $10,000 credit limit across your cards and carry a $3,000 balance, your utilization is 30%. Most scoring models want to see utilization under 30%, and under 10% is even better.
Utilization is calculated two ways: per card and across all your cards combined. A single maxed-out card can hurt your score even if your overall utilization looks fine, because scoring models check both.
Utilization resets every billing cycle based on the balance reported to the credit bureaus, usually your statement balance. Paying down a card before the statement closes, not just before the due date, is what actually lowers reported utilization.