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Why 30% utilization ratios might lower your credit score

Updated: Mar 20



If you ask someone how much of your credit card limit you should spend in order to get a higher credit score, they might say something like “If you use anything more than 30% your score will decrease, so keep it under that”..

and I would agree with them, but I would also say using no more than 30% of your credit limits is a guideline, not a rule, and using less (way less) is better for your score.

Credit utilization makes up 30% of your credit score, so it’s very important that you keep a eye on it.
What is credit utilization?
According to experian.com “..it’s how much you currently owe divided by your credit limit. It is generally expressed as a percent.”

An example would be, if your balance is $300 and your credit limit is $1,000, then your credit utilization for that credit card is 30%.

What I personally do is aim for a utilization rate of 12% or less.
(Ideally 5-8%)

The way I keep track of all of my cards utilization rates is simple. As soon as I get a new credit card I make it a point to call the number on the back of the card & ask two questions:


“What is my due date?” & “What is my statement date?”


Then I write those two dates down.


I’m now going to make it a point to pay my credit card down to at least 12% utilization before that statement date rolls around.

Soon as the date passes, I max my card out again.



I suggest people do not make it a habit to pay minimum balances, that's a great way to not only get a lower score but it’s also an easy way to get financial headaches & stupid big credit card balances.


So if you’re a hustler chasing larger lines of credit in order to start buying things that will return a profit to you (aka investing), one thing you are definitely gonna want to do is keep that utilization low by paying a day or two before that statement date so you look responsible when your card company reports your spending to the credit bureaus.




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