What is credit utilization?
Reviewed by the CompareMyCard editorial team · Last updated 14 August 2026
Credit utilization is the percentage of your total available credit that you're currently using. If you have a $5,000 credit limit and a $1,500 balance, your utilization is 30%.
It's calculated two ways that both matter: per-card utilization (one card's balance against its own limit) and overall utilization (all your balances against all your limits combined). Credit scoring models look at both.
A worked example
You have two cards, a $5,000 limit with a $1,000 balance, and a $2,000 limit with a $1,400 balance. Your overall utilization is $2,400 of $7,000 available, about 34%. Even though the first card looks fine on its own (20%), the second card's 70% utilization drags the overall number up and can hurt your score.
Why it matters when choosing a card
Utilization is one of the biggest factors in your credit score, generally more influential than most people expect. A card with a higher credit limit can lower your utilization automatically, without you spending any less, which is one reason people with good credit sometimes request a limit increase even if they don't plan to use it. It's also why opening a new card can briefly help utilization (more available credit) even though it briefly dings your score for the hard inquiry.