Finance glossary
Credit Utilisation
Also known as: Utilisation ratio
In simple terms
Credit utilisation is how much of your available credit you are actually using. If you owe £600 on a card with a £2,000 limit, your utilisation is 30%. Lower is generally better for your credit score.
On this page
What does credit utilisation mean?
Credit utilisation is the proportion of your available credit that you are currently using, usually shown as a percentage. It applies mainly to revolving credit such as credit cards and overdrafts, where you have a limit and a balance.
A lower utilisation suggests you are not overly reliant on credit, which lenders tend to view positively. A high or maxed-out balance can signal financial pressure, even if you always pay on time.
How credit utilisation works
You work it out by dividing your balance by your credit limit. Across all your cards, it is your total balances divided by your total limits. Many lenders view keeping utilisation below around 30% as a healthy guide, though there is no official cut-off.
The figure that counts is usually the balance reported to the credit reference agencies each month, which is often your statement balance — so paying down before the statement date can lower the utilisation that gets recorded.
How could this affect me?
Keeping balances low relative to your limits can help your credit score and show lenders you manage credit comfortably. Repaying more of the balance, or spreading spending, both bring utilisation down.
Closing a card you rarely use reduces your total available credit, which can push your utilisation up on the cards that remain — so it is not always the tidy move it seems.
Example
Worked example on a single credit card:
| Credit limit | £2,000 |
|---|---|
| Balance owed | £600 |
| Credit utilisation | 30% (£600 ÷ £2,000) |
Keeping utilisation lower — say under 30% — is generally viewed as healthier by lenders, though there is no official threshold.
Things to watch out for
- High utilisation can dent your score even if you never miss a payment.
- It is usually your statement balance that gets reported, not the balance after you pay.
- Closing an unused card cuts your available credit and can push utilisation up elsewhere.
- The “30%” guideline is a rule of thumb, not an official limit.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, How to improve your credit score (opens in a new tab). Accessed 22 Aug 2026.