What is credit utilization?
Credit utilization: Credit utilization is how much of your available revolving credit you are using, usually measured across all your credit cards and for each card.
To estimate it, divide your total card balances by your total credit limits. It is one of the factors credit scoring models weigh most heavily.
Lower utilization is generally better for your score. Paying balances down, or paying before the statement date, can lower the utilization that gets reported.
When you compare offers
If you plan to apply for credit soon, paying down card balances first can change what lenders see.
Related guides
- Choosing a Credit Card by Your Credit Score Range
How your credit score range can point you toward secured, rewards or balance-transfer credit cards, and which fees to check before applying.
- How Your Credit Score Can Affect the Offers You See
Why the offers you see through a marketplace may vary with your credit score, and how prequalification tools try to show relevant options.
This glossary is for general educational purposes and isn't financial, legal or insurance advice. Lendara is not a lender and does not make credit decisions. Lendara is a free online marketplace that connects you with participating lenders and providers, who set their own eligibility rules, rates, fees and terms. Lendara may receive compensation from partners, which may affect which offers appear and their order.