How Credit Utilization Affects Your Score (and What It Should Be)

Why Is Utilization the Second-Biggest Factor in Your Score?

Credit utilization is the percentage of your total available credit that you're currently using. It accounts for 30% of your FICO score — second only to payment history. And unlike payment history, you have more day-to-day control over it.

The formula is simple: total balances ÷ total credit limits = utilization ratio. If you have $3,000 in balances across cards with $10,000 in total limits, your utilization is 30%.

What's the Ideal Utilization?

Below 30% is the standard advice. But if you want to maximize your score, aim lower:

Below 10% is what many people aim for. People with 800+ FICO scores typically have utilization in the 1-7% range.

1-3% is often cited as the sweet spot. Having a tiny balance (not zero) that you pay in full each month shows activity while keeping utilization minimal.

0% can actually be worse than 1-3%. Some scoring models interpret zero utilization as inactivity. A small balance shows you're actively using and managing credit.

This applies both to individual cards AND overall. Having one maxed card at 95% utilization drags your score even if your overall ratio is 20%.

How Can You Lower Utilization?

Pay down before the statement date. Your balance is typically reported to bureaus when your statement generates — not when you make a payment. If you pay down before the statement close, the lower balance is what gets reported.

Request limit increases. If your $5,000 limit becomes $10,000, your utilization drops from 30% to 15% without paying a dollar. Our guide on what moves your credit score covers this too.

Spread balances across multiple cards. Two cards at 25% utilization each is better than one card at 50% and one at 0%. Per-card utilization matters.

Don't close old cards. Closing a card removes that limit from your total available credit, instantly raising your utilization percentage.

What Is the AZEO Method?

AZEO stands for All Zero Except One. Before your statements close, pay all cards to zero except one, which you leave with a small balance ($5-50). This produces the lowest possible utilization while still showing activity.

This is a scoring optimization technique, not a lifestyle recommendation. Use it strategically when you know your score is about to be pulled — like shortly before a mortgage application.