Credit utilization is the percentage of available credit you’re using. Scoring models view lower utilization as better, since it suggests you’re not overly reliant on borrowing. A utilization rate of 10% is generally considered excellent, while anything over 30% can start hurting your score. This factor is second only to payment history in importance for credit scores.

The nuance is that utilization is often reported at the statement date, not after your payment. This means a large purchase right before the statement closes can inflate utilization even if you pay it off immediately. To manage this, some consumers make mid-cycle payments or spread expenses across multiple cards. Keeping utilization low consistently is one of the fastest ways to improve credit health.