Let’s be real—credit utilization is one of the most confusing parts of a credit score. You’ve probably heard that “keeping your balances low is good,” but how low is low enough?
What if I told you that even if you pay your credit card in full every month, your utilization could still be hurting your score? Yep, that’s a thing.
In this guide, we’ll break down:
- What credit utilization actually is (and why it matters).
- The best utilization percentage for a good score (hint: under 30% is not enough).
- How to lower your utilization fast (without paying off debt overnight).
- Pro tricks to keep your score high—even if you use credit cards a lot.
Let’s get into it.
What is Credit Utilization? (And Why Does It Matter?)
Credit utilization is just a fancy way of saying how much of your credit limit you’re using. It’s the second-biggest factor in your credit score (right after payment history).
Here’s the basic formula:
👉 Credit Utilization = (Your Balance ÷ Your Credit Limit) x 100
Example:
- You have a credit card with a $1,000 limit.
- You charge $500 on it.
- Your utilization is 50% (which is too high).
💡 Why does this matter? Lenders don’t like to see you using too much of your available credit. They see it as a risk—even if you pay in full every month.
What’s the Best Credit Utilization Percentage?
You’ve probably heard that keeping utilization under 30% is “good.” But the truth is:
✅ Under 30% is okay
✅ Under 10% is much better
✅ 1%–3% is the sweet spot
❌ Over 30% starts hurting your score
❌ Over 50% is a red flag for lenders
What if You Pay in Full Every Month?
Even if you never carry a balance, your utilization might still be high when your statement closes. Credit bureaus see whatever balance is reported by your credit card company, which isn’t always the same as your final payment amount.
💡 Pro Tip: If you pay your card in full but your utilization is still high, use the “Two-Payment Trick” (explained below) to fix it.
How to Lower Your Credit Utilization (FAST)
If your utilization is hurting your score, you don’t have to wait months to fix it. Here are quick ways to lower it right now:
1. The “Two-Payment Trick” (Use It Before Your Statement Closes!)
If you’re paying your card in full but still have high utilization, this is the easiest fix.
👉 How it works:
1️⃣ Make an extra payment BEFORE your statement closing date.
2️⃣ Then pay the rest after the statement posts.
Why? Credit card companies report your balance at the statement close date. If you pay part of it off before then, the lower balance gets reported—which means lower utilization & a higher score!
💡 Pro Tip: Set up an automatic mid-cycle payment to make sure you never show high utilization.
2. Request a Credit Limit Increase (Soft-Pull Options Available!)
One of the fastest ways to lower your utilization is to increase your credit limit. If your limit goes up, your utilization percentage drops—even if your spending stays the same.
Some issuers allow credit limit increases WITHOUT a hard inquiry:
✔ American Express (usually no hard pull)
✔ Discover (can request via app)
✔ Capital One (soft pull for existing customers)
✔ Chase (sometimes offers automatic increases)
💡 Pro Tip: Before requesting a credit limit increase, log into your bank’s app and check if they offer soft-pull increases.
3. Open a New Credit Card (Strategically)
If you increase your total credit limit by opening a new credit card, your utilization drops.
Example:
- You have $5,000 total credit and $2,000 in balances (40% utilization).
- You open a new $5,000 credit card—now your total credit is $10,000.
- Your utilization drops to 20% instantly.
Best credit cards for high limits & low fees:
Citi® Double Cash Card (2% cash back, no annual fee)
Chase Freedom Unlimited® (great for balance transfers)
Discover it® Cash Back (soft pull pre-qualification)
💡 Pro Tip: If you already have a card with a bank, ask for a limit increase instead of opening a new card. This avoids a hard inquiry.
4. Pay Off Small Balances Across Multiple Cards
If you have balances spread across multiple cards, your utilization might be higher than you think.
👉 Even a small balance on a high-limit card affects your score.
Fix it:
✔ Pay off small balances (especially on cards with high interest rates).
✔ Focus on bringing all balances under 10% for the biggest score boost.
💡 Pro Tip: If you have multiple cards, use Experian Boost to add utility bills and rent payments for extra positive credit history. Try it here.
Final Thoughts: Keep Your Utilization Low & Your Score High
Key Takeaways:
- Keep utilization under 10% for the best score.
- Use the Two-Payment Trick to lower reported balances.
- Request a credit limit increase (without a hard pull if possible).
- Consider opening a new card if it makes sense for you.
- Pay off small balances across multiple cards.
Small changes can make a BIG difference. Lowering your credit utilization can boost your score fast, making it easier to get approved for loans, lower interest rates, and build long-term financial success.
💬 Got questions? Drop them in the comments—I’d love to help!
