Credit Utilization: The 30% Rule Is Wrong

Credit utilization is the percentage of your available revolving credit that you are currently using. It accounts for about 30% of your FICO score.

The popular advice to stay under 30% is conservative and outdated. The data from FICO and VantageScore shows the highest scores belong to people with utilization under 10% — and ideally under 4%.

Utilization is measured two ways: per card and aggregate. A single card maxed out can hurt your score even if your total utilization is low. The bureaus see the snapshot reported on your statement date, not what you actually carry month to month.

Two simple tactics: pay your statement balance down before the statement date so a low number gets reported, and ask for credit limit increases every 6 months on cards with positive payment history.

Done right, optimizing utilization alone can add 30 to 80 points to a thin or mid-tier credit file in a single billing cycle.