What Is Credit Utilisation?
Credit utilisation (also called your credit utilisation ratio or rate) is the percentage of your total available revolving credit limit that you're currently using. It's calculated across all your credit cards and revolving accounts combined — and also measured on each individual account.
Formula: Credit utilisation = (total outstanding balances ÷ total credit limits) × 100
Example: You have two credit cards. Card A has a £3,000 limit with £900 outstanding. Card B has a £7,000 limit with £1,100 outstanding. Total utilisation = £2,000 ÷ £10,000 = 20%.
Credit utilisation typically accounts for around 30% of your credit score calculation — making it the second most important factor after payment history. The good news: it's also the fastest-moving factor. Paying down a balance can improve your score within a single billing cycle.
What Utilisation Percentage Should You Aim For?
1–10%
Optimal range. Shows you're using credit but barely touching your limit. Associated with the highest credit scores. Aim for this if you're preparing for a mortgage or major credit application.
11–30%
Generally considered acceptable and won't significantly hurt your score. Most people in good financial health sit in this range.
31–50%
Starts to have a noticeably negative effect on your score. Suggests you're relying heavily on available credit. Lenders may see this as a risk indicator.
51–100%
Significantly hurts your credit score. Near-maxed or maxed-out cards are a major red flag for lenders and can result in rejections even if you've never missed a payment.
How to Reduce Your Credit Utilisation
Pay down balances before your statement closes
Credit bureaus typically receive your balance data when your monthly statement is generated — not when you make a payment. Paying down your balance a few days before your statement closing date means the lower balance is what gets reported to the bureau that month.
Request a credit limit increase
If your spending hasn't changed but your limit is low, requesting a credit limit increase immediately reduces your utilisation ratio. For example: £2,000 balance on a £4,000 limit = 50% utilisation. Increase the limit to £8,000 and — with the same balance — utilisation drops to 25%. Ask your card provider for a limit increase; this may trigger a soft or hard search depending on the lender.
Spread spending across multiple cards
Rather than putting all spending on one card and maxing it out, spread it across two or three cards. This keeps individual card utilisation low even if combined spending is the same. Remember: bureaus measure both overall and per-account utilisation.
Make multiple payments per month
Instead of one large payment at month end, make smaller payments throughout the month. This keeps your average balance lower, which means a lower utilisation reading when your statement closes.
Keep old cards open with a zero balance
Old credit cards with zero balances contribute their credit limit to your total available credit — reducing your overall utilisation ratio. Closing them removes that available credit and can raise your utilisation significantly. Keep them open, use them occasionally to prevent dormancy closure, and pay in full.
Individual Account vs Overall Utilisation
Credit bureaus measure utilisation in two ways: across all your accounts combined, and on each individual account. A card that's 90% full hurts your score even if your overall utilisation is low — because the individual account utilisation is also assessed.
The practical implication: don't max out any single card even if your overall utilisation is healthy. Try to keep every individual card below 30% as well as maintaining good combined utilisation.
Unlike missed payments (which stay on your file for 6 years), high credit utilisation has no long-term memory. As soon as you pay down a balance, the next month's statement shows the lower utilisation and your score recovers immediately. This makes it uniquely actionable — you can improve this factor quickly by simply paying down debt.