How Much of My Credit Card Should I Use? The 30% Utilization Rule

Many credit experts say you should keep your credit utilization ratio — the percentage of your total credit that you use — below 30% to maintain a good or excellent credit score.

Credit utilization is a major factor in your credit scores, so it pays to keep an eye on it. View the 30% rule as a good guideline, but be aware that using even less is better for your score.

Keeping up with what percentage of your credit limits you're using is easier than you may think. You can set up alerts with your credit card issuers to track your balances. Or sign up for a free credit score that displays utilization rates.

How much of my credit card should I use?

Keeping your credit utilization at no more than 30% can help protect your credit. If your credit card has a $1,000 limit, that means you’ll want to have a maximum balance of $300.

Why the 30% rule? It’s likely because the recommendation to keep your credit utilization low invariably prompts the question, “How low?” Having a number gives you an upper limit when thinking about how much to spend on your credit cards.

The 30% answer finds backing from the credit bureau Experian: "The 30% level is not a target, but rather is a maximum limit. Exceeding that level will have significantly negative impact on credit scores," says Rod Griffin, Experian’s senior director of public education and advocacy. "The lower a person’s utilization rate, the better from a scoring standpoint."

Is 0% credit utilization bad?

In general, using as little of your credit card limits as possible is better for your scores. So logic would suggest that paying off your credit cards early so that a zero balance is reported to the credit bureaus would produce the highest scores. But using 1% of your credit limits may help your credit scores even more than 0% usage.

Credit scoring systems are designed to predict how likely you are to repay borrowed money. The two biggest credit factors — accounting for about two-thirds of your scores — are paying on time and the amount you owe.

If you are trying to squeeze every possible point from credit utilization, the trick is to aim low — just above zero. Credit expert John Ulzheimer says that data has shown that 1% credit utilization predicts slightly less risk than 0%, and scoring models reflect that.

Tommy Lee, a senior director at FICO, one of the two dominant credit scores, explains it this way: “Having a low utilization indicates you are using credit in a responsible manner.”

How credit utilization affects your scores

How much you owe on your credit cards relative to your credit limits makes up about 30% of your FICO score and 20% of your VantageScore, a competitor scoring model.

Note that your credit scores are composed of several factors. If your overall credit profile is excellent, it’s unlikely that your credit scores will plunge if your credit utilization ratio rises slightly one month.

And, happily, damage from credit utilization is easily reversed. With the vast majority of scores, as soon as a new, lower balance (or lower credit utilization) is reported to credit bureaus, the harm is undone.