What is Credit Utilization?
Your credit utilization ratio measures how much of your available revolving credit limit you are using on your monthly statement closing dates. If you have a credit card with a $10,000 limit and a statement balance of $3,000, your utilization ratio is 30%.
Why It Matters (30% of FICO)
Credit utilization ("Amounts Owed") accounts for 30% of your FICO® Score—second only to payment history (35%). Scoring models evaluate both aggregate utilization (total balances divided by total credit limits across all cards) and per-card utilization.
The 1%–9% Optimization Rule
While keeping utilization below 30% prevents severe score penalties, FICO's highest tier (800+) is achieved by letting 1% to 6% utilization report on a single card on the statement closing date, and paying that statement balance in full before the due date to incur $0 interest.