Three Ways to Lower Your Credit Card Utilization

Credit Card utilization is an important component of your credit score. Want to improve (raise) your credit score? Improving your credit card utilization will help. How, you ask? Oh, jeez! Do I have to spell out everything for you?!

Alrighty then. Pay attention ’cause I’m only gonna say this once.

The amount of available credit you use each month is an indicator of your ability to repay that money. Your utilization rate is determined by dividing your total credit card balance by your total credit card limit.

Here, I’ll make it easy: Say your limit is $1000 and you spend $942. Your utilization rate is 94.2% – which is pretty friggin’ high.

See the pretty picture I made for you.



Someone binged in July.


According to my peeps at, generally, the higher your credit card utilization, the lower your credit score.

So here are three ways to lower your credit card utilization1:

  1. Make more than one credit card payment each month, in order to keep your balance low.
  2. Use more than one credit card (if you’ve got ’em). This keeps the balance on any single card from getting too high.
  3. Increase your credit limit. You have to ask your credit card issuer but don’t bother if you’ve been a deadbeat with your payments. Keep in mind a credit increase request might result in a credit inquiry (which could lower your credit score).

The magic number for utilization is said to be 30%. Not too much, because you have to show some fiscal restraint. Not too little, since lenders want to see proof that you can handle credit. This does not mean you have to carry a balance from month to month. We’re just talking about monthly usage.

Now, go forth an utilize!




1 Credit Karma, Credit Card Utilization and Your Credit Score, 11/6/12


About the Author ()

Melvin is the Smart Green Pig. "Smart" as in intelligent. Some would say "Super Intelligent" or perhaps "Genius". But also "Smart" as in surly and sarcastic, so watch your Ps and Qs! By the way, Melvin gets paid (quite handsomely) by SECU, so even though he's completely unbiased, some might think otherwise. Just sayin' (disclosin').

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