October 31st, 2012

Credit Report Card Break-Down: Open Credit Card Utilization

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Credit Report Card Break-Down: Open Credit Card Utilization

The first item listed in your Credit Report Card is your open credit card utilization. This factor greatly impacts your credit score.

Your open credit card utilization is the percentage of your credit limits that you’re using at any given time. It can be calculated by dividing your credit card balances by your credit limits.

It’s a metric used by most credit score models to help assess your creditworthiness.

How does credit utilization affect my credit?

Generally, the higher your utilization (the more credit card debt you have), the lower your credit score. However, it’s interesting to note that a utilization of “0” isn’t necessarily a marker of a good credit score. If you don’t show any credit card activity, creditors have no recent credit history on which to base their lending decisions.

Let’s take a look at Credit Karma’s credit data to see how utilization affects your credit score. A couple of years ago we looked at profiles of credit score ranges and translated the data into an infographic. In this graphic, we found that even the highest credit score members carried at least some credit card debt. At the time, Credit Karma members with a credit score of 800 or higher had an average credit limit of $78,377 and an average credit card debt load of $5,429, putting their collective average utilization rate at 6.93 percent.

Conversely, Credit Karma members with the lowest credit scores (lower than 500) had an average credit limit of $2,938 and an average credit card debt of $3,520, leaving them with an astounding credit utilization rate of 119.81 percent.

Let’s take another example. In the grade distribution chart in the Credit Report Card, you can see that Credit Karma members with 0 percent utilization have on average a 658 credit score and a grade of “C,” while those who show just a little credit card use (between 1 and 20 percent utilization) average a 731 credit score, giving them a grade of “A.”

Open Credit Card Utilization Grades

What can I do?

Now that we’ve reviewed the data, let’s talk about the strategies to can take to get that “A” grade on your Credit Report Card:

  1. Calculate your utilization rate cap. Find out what 30 percent of your current credit limits is—that’s the number you want to remember. For instance, if you have a combined credit limit of $3,000, your ideal rate would be $1,000.
  2. Always stay BELOW that number. Now that you know your utilization rate cap, stay below that number at all times. Remember that you don’t need to charge 30 percent of your limits. You just need to make sure you don’t go above that limit if possible. And if your credit limits increase, that shouldn’t be a temptation to spend more.
  3. Keep your cards active. Using your credit cards regularly is one of the best ways to build credit. Plus, did you know that some credit card issuers will stop reporting your credit card activity if your cards remain dormant for a while? Charge just a little each month, but remember to pay off your balances in full each month, too.

Stay tuned for more of the Credit Report Card Break-Down series here on the Credit Karma Blog!

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.


  1. Credit utilization is important, but is not the only factor people should be concerned about. Your utilization ratio changes every month, and impacts your score for 30 days. A delinquency stays on your report for seven years.

    Don’t sacrifice an on time payment history on one account for a lower utilization ratio on your revolving credit accounts.

    Kevin @ Credit Bureau Insider at 8:30 am on November 5, 2012
  2. Paying on time, having several cards, having a long AAoA and low utilization rate (1-9%) is the key to high scores. The ratio doesn’t have to change every month if you use credit cards for what they are, a replacement for cash you already have (and to reap the benefits of the rewards), you just have to make sure to pay in full before statement cuts and only leave a small balance to report.

    People need to stop thinking of cards as extra spending power because they are not.

    crosel at 6:36 am on December 11, 2012
  3. I’ve always had excellent credit. Recently I saw my report that said my rating dropped due to the amount of revolving cards I have.

    I have a number of cards to take advantage of different benefit programs, but my overall spending levels has remained relatively the same.

    I was told if I close some cards that will negatively impact my credit.

    How can I improve my score?

    Thank you

    linda at 8:17 am on February 21, 2013
  4. I cannot seem to figure out why Credit Karma lists my credit utilization grade at a C when I have zero credit card debt and they even list the debt at zero and utilization at N/A? What the heck??

    Lloyd at 8:40 am on April 11, 2014
  5. Mike

    Hi Lloyd – If you’d like our help team to take a look, feel free to email us at support@creditkarma.com. Thanks!

    Mike at 11:54 am on April 11, 2014
  6. So My credit card utilization has always been pretty consistent but I noticed that if I pay the credit card before I even get the bill or it enters the grace period it is almost like the debt was never there at all. So a few bills ago I still paid the entirety of my credit card bill off WAY before the grace period was even over, but because I let it actually appear on my bill it knocked my credit utilization into the 20-40% range and after paying it back down to the 1-20 range my credit score didn’t go back up? is this because there is some record that must now expire?

    ISRAEL at 1:48 am on August 15, 2014
  7. Charmaine

    Hi Israel, thanks for the comment. There isn’t a record that needs to expire before your score will go up. Unfortunately, lowering your utilization after recording a higher utilization doesn’t automatically mean your score will go back up. There are also many reasons your score could have dropped in the first place. That’s great that you’re paying attention to your credit, though, and your score could bounce back over time.

    Charmaine at 3:30 pm on August 15, 2014
  8. yes, I am a little confused. I have a 0 balance on my active CCrd balance and i have “C” grade on my Credit Card Utilization which has negatively affected by my score a few points and i’m kinda ticked at that. I still have a very high 700s score, but it has dropped a few pts because of this.

    Sounds crazy to me. I dont want to carry any debt or pay interest so pay it off monthly.

    any suggestions?


    Jack at 12:21 pm on November 17, 2014
  9. Charmaine

    Hi Jack, luckily you don’t have to carry any debt or pay interest to show a little credit card activity. You just need to have a small balance when your card reaches its statement date. That balance will then be reported to the bureaus. You can still pay off the balance before the actual bill is due. Hope this helps!

    Charmaine at 7:05 pm on November 18, 2014

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