Glossary term
Credit Utilization
Credit utilization is the share of your available revolving credit that you are currently using, shown as a percentage. It is calculated by dividing your card balances by your credit limits, both per card and across all cards. Lower utilization generally helps credit scores, and it is one of the factors you can change quickly.
Updated October 17, 2026 · Editorial Team
How Credit Utilization works in practice
Scoring models look at the balances your card issuers report, usually on the statement date, and compare them with your limits. They consider overall utilization and the utilization on each card. Paying a balance down before the statement closes can lower the reported figure even if you always pay in full.
Say you have two cards, each with a $5,000 limit. One carries $1,500 and the other $500. Overall utilization is $2,000 ÷ $10,000 = 20%. Per card, it is 30% on the first and 10% on the second. Paying $1,000 off the first card would bring overall use down to 10%.
Because utilization reflects current balances, its effect on a score is usually temporary and changes once new balances are reported. Closing an unused card lowers your total limit and can raise your utilization. Lower is generally better, and there is no single magic number that guarantees a score.
Credit Utilization: quick questions
When is my utilization measured?
Usually when your issuer reports to the credit bureaus, which is often the statement closing date, not your payment due date.
Does closing a credit card raise utilization?
It can. Closing a card removes its limit from your total, so the same balances become a larger share of your remaining credit.
Do installment loans count toward utilization?
Utilization mainly refers to revolving accounts like credit cards and lines of credit. Installment loans are evaluated differently.
Sources
- Credit reports and scores — Consumer Financial Protection Bureau. Accessed October 17, 2026.
- AnnualCreditReport.com — Central Source LLC (authorized by federal law). Accessed October 17, 2026.
We cite primary sources: regulators, central-bank data and federal agencies. Worked examples on this page are our own calculations. See our methodology.
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