Why Your Credit Utilization Ratio Is So Important

So, if lenders don’t want you to “eat all of the cookies in the jar,” what’s a reasonable amount? What is a good credit utilization ratio? 

A rule of thumb that credit savvy consumers go by is sticking to below 30%. So if you have a $1,000 credit limit, you would carry a balance of less than $300. If you have 10 cookies in the jar, you’re eating less than 3. 

But, for even better results, you might want to use even less. According to credit bureau Experian, “People with exceptional credit scores (800 or higher on the FICO® Score range of 300 to 850) tend to keep utilization under 10% for each card and for total credit card use.”

In other words, the lower, the better when it comes to credit utilization. If you’re maxing out your credit card and paying it in full and on time, that’s great. But it won’t help your credit utilization, which still makes up 30% of your score.