Credit utilisation

💳 Credit Cards · 3 min read · Last reviewed 2026-10-02 · By the AlfaFinances editorial team

Credit utilisation is how much of your available credit you're actually using, shown as a percentage. It's one of the biggest factors in your credit score, using a large share of your limit, even if you pay it off in full every month, can make you look higher-risk to lenders and push your score down, regardless of whether you're actually struggling financially.

A worked example

If you have a $5,000 credit limit and typically carry a $2,500 balance at statement time, that's 50% utilisation, generally considered high. Most guidance suggests keeping utilisation under roughly 30%, and lower still (under 10%) tends to be viewed even more favorably by credit scoring models.

Key takeaways

Utilisation is your balance divided by your credit limit, expressed as a percentage.
High utilisation can hurt your credit score even if you always pay in full by the due date.
Keeping utilisation low (commonly recommended under 30%) tends to support a healthier credit score.

Common mistakes

Assuming utilisation doesn't matter as long as you pay in full each month.
Maxing out a card temporarily without realizing the statement balance (not just what you eventually pay) is often what gets reported.
Closing old credit cards, which can reduce your total available credit and raise your utilisation percentage.

Test yourself

1. What is credit utilisation?

Your total number of credit cards
The percentage of your available credit you're currently using
Your annual income
Your bank account balance

Answer: The percentage of your available credit you're currently using. Utilisation measures how much of your credit limit is being used, as a percentage.

2. Can high utilisation hurt your credit score even if you pay in full every month?

No, paying in full always prevents any impact
Yes, the balance reported at statement time can still affect your score
Only if you miss a payment
Utilisation has no connection to credit score

Answer: Yes, the balance reported at statement time can still affect your score. The balance reported to credit bureaus at statement time (before you pay) is often what's used to calculate utilisation, regardless of later full payment.

3. What utilisation level is commonly recommended to stay under?

100%
Roughly 30%, with lower being even better
There is no recommended level
75%

Answer: Roughly 30%, with lower being even better. Keeping utilisation under about 30% (and ideally lower) is commonly viewed favorably by credit scoring models.

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Educational information only, not financial advice. AlfaFinances does not execute trades, hold your money or recommend that you buy or sell any security. Prices and company data come from public sources and may be delayed or inaccurate. Past performance does not indicate future results, and investing involves risk, including loss of principal. See our editorial policy and privacy policy. Last updated: 2026-10-02.