A good credit score is a huge asset in clearing many of life’s biggest financial obstacles.
From securing a mortgage for your dream home to getting that low interest rate on your car loan, having a credit score that exceeds 760 is a key ingredient to landing the best possible terms for financing the biggest purchases you’ll make.
One of the key components of achieving a good credit score is a solid credit utilization ratio, which accounts for approximately 30% of your credit score.
This ratio, in its most simplest terms, is the percentage of your available revolving credit that you’re currently using.
The average American has a credit utilization ratio of 28.3%, according to the latest data from Experian.
Money expert Clark Howard says this number should stay under 30%, and those seeking excellent credit should keep it below 10%.
In this article, we will:
Explain credit utilization ratios
Help you calculate your ratio
Tell you how to improve your ratio
Look at the average American ratios based on recent data
Understanding Credit Utilization Ratio
Your credit utilization ratio accounts for approximately 30% of your credit score in scoring models like FICO, so having an understanding of how this works is a key piece to maintaining or improving your credit score.
As I mentioned above, it measures how much of your available revolving credit you use.
For most people, your utilization ratio is calculated primarily based on credit card activity. That includes both cards you’ve applied for yourself and cards on which you’re listed as an authorized user.
The utilization ratio also includes any personal lines of credit and home equity lines of credit (HELOCs).
For example, if your total open available lines of credit total $20,000 and you have a combined balance of $2,000 between those accounts, your utilization ratio would be 10%. That would be considered a strong utilization ratio.
Typically, anything above 30% can hurt your overall credit score.
The reason is actually pretty straightforward: Credit issuers care about this because a high ratio can indicate that you may be under some financial strain, while a lower ratio may indicate that you’re handling your credit responsibly with less financial strain.
Remember, credit issuers want to mitigate risk when lending money. A low utilization rate can make you appear “safer” when it comes to getting their repayment.
Your utilization ratio is the second-largest piece of your credit score. It is illustrated as “Amounts Owed” on our credit score pie chart here:
How To Calculate Your Credit Utilization Ratio
Not sure what your credit utilization ratio looks like? You may be able to find it isolated on a free credit score report.
Otherwise, it’s fairly simple to calculate on your own:
Log in to your credit card accounts and personal lines of credit.
Write down your current balance and your credit limit for each account.
Add the balances from each of your accounts together.
Add the credit limits from each of your accounts together in a separate tabulation.
Divide the total balances owed by the total of all your credit limits.
Multiply that number by 100 to see it as a percentage.
Remember: The lower this number is, the better off you are.
If you’re below 10%, you’re in great shape. You’re probably enjoying a nice boost to your credit score as a result.
If you’re above 30%, you have some work to do to improve that number so that your credit score can go up.
Tips for Keeping Your Credit Utilization Low
So how do we keep this calculation low enough to improve your credit score?
Here are a few ideas that may help:
Request a credit limit increase. Your utilization ratio may be high because the credit limit from your existing credit card issuer is too low. Asking them to extend you more available credit could be a good way to make your ratio much healthier without taking on any new debt. We have some advice on requesting a credit limit increase.
Change your payment patterns. Credit expert Beverly Harzog says that you should call your credit card issuer and ask when your balance gets reported to the credit bureaus: “That day is often the closing date (the last day of the billing cycle) on your account. Note that this is different from the “due date” on your statement.” Paying right before this report date should give you a better chance at a lower reported utilization number. You can read more expert tips for increasing your credit score.
Open a new credit card. If you’re on top of your spending and you’re paying credit card bills in full, you may find that adding a new card to your mix is a good way to raise your amount of available credit. We also have advice on selecting a good rewards or cash back credit card that can help you earn more on your spending.
Experian’s 2026 Data on American Credit Utilization Ratios
The national average for utilization ratio is 28.3% according to Experian’s data. But, as you can see in the chart above, it can vary somewhat significantly by state.
Experian’s state-by-state report indicates that having a lower utilization ratio is a clear recipe for having a higher credit score.
“Looking at utilization by state, lower credit utilization ratios generally correspond with higher FICO Scores. Most states with average credit card utilization below 30% have average FICO Scores of 720 or higher. In contrast, states where average utilization exceeds 30% tend to have lower average FICO Scores and, likely, higher average APRs.”
Just look at how this chart correlates. People with Poor credit scores (under 580) have utilization ratios more than 10x higher than those who are enjoying an Exceptional score (800+).
Is your utilization score in good shape? Do you have a strategy for keeping it low? We’d love to hear from you in the Clark.com community.
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