THE NO JOB LIFESTYLEWhat usually counts
- Major bank credit cards: balances and limits count toward both ratios.
- Store cards: these are generally included. Low limits often mean high ratios.
- Secured cards: these report like other cards, and the deposit does not lower the utilization.
- Unused cards: the limit adds to your total available credit if the card is open.
- Authorized user cards: usually included in your ratio, so a parent's high balance could show on your file.
What may not count
- Installment loans: car, student and personal loans are not part of revolving utilization, although their balances still count in the amounts owed.
- Charge cards with no preset limit: many scoring models leave them out, or treat them differently, because they have no stated limit.
- Closed cards with a zero balance: the limit no longer helps.
- Large home equity lines: FICO may exclude or treat them more like installment debt when they are big enough, while smaller lines can count.
- Debit cards: not credit, so not counted.
How overall and per card ratios work together
The overall ratio equals total balances divided by total limits. Say you have three cards with limits of $1,000, $2,000 and $7,000, or $10,000 in total. Balances of $900, $100 and $0 add up to $1,000, which is 10% overall. That looks good, but the first card sits at 90%. A scoring model may see that as a sign of stress.
So pay down the highest ratio cards first if you aim to maximize the score, while interest rates may be the right focus if you want to save money. You could also move spending to a card with more room. Scoring formulas are private, and we cannot tell you precisely how much weight each ratio has, but both matter.
Check how your cards are listed
Your report is the source of truth. Look at the balance and limit shown on each account at AnnualCreditReport.com. Sometimes, a missing or wrong limit causes the bureau to use the high balance instead, which may make your ratio look worse. If you see that, contact the issuer or file a dispute.
Before closing any card, run your ratio with and without its limit. Closing a $5,000 card when you have $2,000 in balances and $10,000 of total limits would raise your ratio from 20% to 40%. If there is no annual fee, keeping it open and using it lightly is often the better plan. Also remember that an unused card can be closed by the issuer.
Questions people ask
Do business credit cards count?
It depends on the issuer. Many small business cards do not report routine activity to personal files, unless the account goes delinquent, but some do.
Does a card with a zero balance help?
Yes, its limit adds to your total available credit, which lowers your overall ratio if you carry balances on other cards.
Do cards report on different dates?
Yes. Each issuer usually reports around its own closing date, so your ratio shifts as updates come in during the month.