How High Credit Card Utilization Hurts Your Credit Score

You’ve got a stellar track record when it comes to making credit card payments on time. You may have never given the bank a reason to second-guess your trustworthiness as a borrower. But your credit score may still be in the basement. Why?

There’s more to a good credit score than simply paying your bills on time. True, payment history is the most important factor in your credit score. But nipping at its heels is your credit utilization rate. High revolving balances can drag down your credit score, as banks may view this activity as overspending.

Here’s what you need to know about this critical element of your credit profile.

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Key Takeaways

• High utilization credit score damage is real but reversible: A high credit utilization rate can drag down your score even when you've never missed a payment, but it isn't a long-lasting blemish.

• Utilization is the percentage of available credit you're using: If you carry $6,000 across cards with a combined $30,000 limit, your utilization is 20% — and experts generally advise keeping it under 30%, though lower is better.

• It's the second-biggest scoring factor: Credit utilization sits within the "amounts owed" category, which makes up about 30% of your FICO Score — enough that high balances can cost you 100+ points depending on your situation.

• One maxed-out card can still hurt you: Scores weigh both your overall utilization and each card individually, so a single card at 60% can ding your score even if your total utilization looks healthy.

• Recovery is fast — usually one to two months: Once lower balances are reported to the bureaus, your score can rebound, making utilization one of the quickest credit factors to fix.

• Lower it without closing cards: Pay down balances, make multiple payments a month, consider a consolidation loan or 0% balance transfer, or request a limit increase — but avoid closing cards, which shrinks your available credit.

Summary generated by AI, verified by MoneyLion editors

What Credit Utilization Means

Credit utilization is simply the percentage of available credit that you’re currently using. For example, let’s say you have three credit cards, each with a $10,000 credit limit. If you’ve currently got a total of $6,000 in balances, your credit utilization is 20% ($6,000 / $30,000 = 20%).

The higher your credit utilization, the more detrimental to your credit score. Experts typically recommend keeping your credit utilization below 30% to avoid adversely affecting your credit score — but realize that this isn’t a magic number. The lower your credit utilization, the better for your credit.

There’s just one exception to this rule: A 0% credit utilization isn’t ideal, either. Lenders want to see that you’re using your credit cards responsibly and paying them off. Keeping them in the sock drawer doesn’t impress FICO.

Why High Utilization Hurts Your Credit Score

So, how does high credit card utilization hurt your credit score?

In short, a high credit utilization is a red flag for lenders that you’re spending more than you can repay. Banks aren’t weighing your morals — you can spend your money any way you want (as long as it’s legal). But if your amounts owed keep increasing, it’s a warning sign that you’re probably having money trouble.

Credit utilization accounts for 30% of your total FICO credit score. In other words, high balances are enough to drop your credit score by 100+ points, depending on your specific situation.

Why One Maxed-Out Card Can Still Hurt

Credit utilization is measured in two ways:

1. Your total balances divided by your total credit limits

2. Each individual balance divided by each credit limit

Let’s use the above example of three credit cards, each with a $10,000 credit limit. With the aforementioned $6,000 credit limit, your credit utilization is 20%. But if the entire $6,000 balance is on a single card, your credit utilization for that card is 60% ($6,000 / $10,000 = 60%). That’s not good — and it can negatively affect your credit score.

All to say, you may have a healthy overall credit utilization, but if some of your credit cards themselves have high utilization, it can punch you right in the credit score. For this reason, you should try to spread your balances more evenly across your accounts.

How Long High Utilization Hurts Your Credit Score

High credit utilization will hurt your credit score until either your amounts owed are reduced or your total available credit increases. Once your percentage drops, you may see a positive effect on your credit as soon as your lower balances are reported to the credit bureaus (typically within a month or two).

Lowering your credit utilization is one of the fastest and most powerful ways to improve your credit score. It’s much easier to mend than more serious transgressions, such as missing payments and allowing your account to become delinquent or go into default, which can take years to recover from.

How To Lower Utilization Fast

To quickly lower your balances (or to keep them low), there are some practical steps you can take.

For example, you may take out a debt consolidation loan. Installment loans don’t count toward your credit utilization (only revolving accounts), so you could instantly drop your credit utilization by repaying your credit cards with this personal loan. You’ll also typically benefit from lower interest rates.

Alternatively, you may consider opening a balance transfer credit card to take advantage of 0% intro annual percentage rate (APR) for a year or more. This allows you to repay your debts more quickly, with less of your money going toward interest.

It’s also worth pointing out that high credit utilization may not be from a spending problem, at all. Instead, you may just have a very low credit limit — so everyday expenses may eat up a considerable portion of your available credit. In this case, it can be worth making multiple payments throughout the month. Then whenever the bank reports your balance to the credit bureau, it’ll be lower than if you had simply made a larger payment on your due date. 

You can also ask your issuer for a credit limit increase — though this may come with a hard credit inquiry, which can temporarily lower your credit score.

Mistakes That Can Keep Utilization High

Your credit utilization will remain high if you:

• Only make the minimum payment each month. Depending on your specific balances, it could take many years to pay off your balances by making the minimum payment — thanks to high APR.

• Close your credit cards. If you’ve decided that a credit card isn’t worth paying the annual fee, check to see if you can “product change” the card to a no-annual-fee version instead of closing it. This will help you to avoid losing a portion of your available credit when closing an account.

• Overspend. Impulse purchases are the worst thing that can happen to your credit utilization. Stick to a budget no matter what.

Bottom Line

It’s important to know what affects your credit score so you can understand how to maintain a respectable number. Credit utilization is one of the biggest factors, as a high percentage can suggest to lenders that you’re relying on credit to pay for things you can’t afford.

Fortunately, high credit utilization isn’t a long-lasting blemish on your credit profile. Pay down your balances, and you can expect a boost in your credit score after just a month or two.

Credit Utilization Impact on Credit Score FAQs

How does high credit card utilization hurt your credit score?

High credit card utilization hurts your credit score by signaling to lenders that you may be unable to make ends meet with cash. This can mean you’re at a high risk of missing payments.

What is considered high credit utilization?

Experts generally consider anything above 30% too high for credit utilization. In most cases, the lower the better.

How long will high utilization hurt my credit score?

High utilization will hurt your credit score until you lower it. Pay down your debts, and your credit score could improve notably within a month or two.

Key Terms

• Credit utilization rate: The percentage of your available revolving credit you're currently using — total balances divided by total credit limits. Experts generally advise keeping it under 30%, with lower being better.

• Amounts owed: The FICO category that houses credit utilization and accounts for about 30% of your score — the second most important factor after payment history.

• Per-card (individual) utilization: Utilization measured on a single card — each balance divided by that card's limit. A high rate on one card can hurt your score even when your overall utilization is low.

• Revolving credit: Open, reusable credit like a credit card. Only revolving accounts count toward your utilization — installment loans don't.

• Installment loan: A loan repaid in fixed monthly amounts, like a personal or consolidation loan. Because it isn't revolving, paying off cards with one can instantly lower your utilization.

• Balance transfer card: A card that lets you move balances to a 0% intro APR for a year or more, helping you pay down debt faster without interest eating into payments.

• Hard inquiry: A credit check that can temporarily lower your score. Requesting a credit limit increase may trigger one, even though a higher limit can lower your utilization.

• Statement reporting date: The point when your issuer reports your balance to the bureaus. Making payments before this date — or multiple payments a month — means a lower balance gets reported.

Sources

• myFICO: FICO Score Factor: Amounts Owed 

• myFICO: What's in my FICO Scores? 

• CFPB: How do I get and keep a good credit score? 

• CFPB: Does it hurt my credit to close a credit card? 

Summary generated by AI, verified by MoneyLion editors

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