THE NO JOB LIFESTYLEThe chart
- 0%: no reported balance. This is fine, though some people find having a small balance on one card scores slightly higher than a full zero.
- 1% to 9%: generally the best range. People with very high scores tend to sit here.
- 10% to 29%: generally viewed as good.
- 30% to 49%: generally fair. This range often starts to weigh on a score.
- 50% to 74%: high. The score impact tends to be noticeable.
- 75% and above: very high. This often signals financial stress to a scoring model.
How to read it with real numbers
Utilization equals your reported balance divided by your credit limit. Here is what the ranges look like with an overall limit of $5,000:
- Under $500: under 10%.
- $500 to $1,499: 10% to 29%.
- $1,500 to $2,499: 30% to 49%.
- $2,500 to $3,749: 50% to 74%.
- $3,750 and above: 75% or more.
Scoring models look at utilization both overall and on each card. A single card at 90% can matter even if your overall figure is only 15%, so spreading balances can help.
Build your own simple spreadsheet
You only need four columns: card name, reported balance, credit limit and percentage. In the percentage column, divide the balance by the limit and format the result as a percent. Add a total row that sums the balances, sums the limits and divides one by the other. Update it each month after your statements close, because that is usually when issuers send balances to the bureaus.
A fifth column for the statement closing date is useful. It tells you the day by which to pay if you want a lower figure reported. Leave out any card with no preset spending limit, as many scoring models treat those differently. You can check what is actually being reported by comparing your numbers with your reports.
Getting into a lower band
The direct route is paying balances down, ideally before the closing date. Other options include asking your issuer for a limit increase, which may or may not involve a hard inquiry, so ask first. Keeping old cards open also keeps their limits in your total. Paying small amounts twice a month can help you keep the reported balance low without changing your total spending.
Amounts owed make up about 30% of a FICO score, but they are only one factor. A low ratio does not cancel a recent late payment. Treat the chart as a guide to one piece of your file, and keep payments on time first.
Questions people ask
Is the 30% rule official?
No. It is a popular rule of thumb. There is no published cliff at 30%, and many people with very high scores stay far below it.
Do you need to carry a balance to get a good ratio?
No. A statement balance that you pay in full still gets reported, and no interest is needed for it to count.
Which accounts belong on the chart?
Revolving accounts such as credit cards and most lines of credit. Installment loans like car and student loans are not part of this ratio.