What is credit utilization and what percentage should I aim for?

Credit utilization measures how much of your available revolving credit you are using, expressed as a percentage. If you have a $10,000 credit limit and a $3,000 balance, your utilization is 30%. Utilization applies both to each individual card and to all cards combined. It accounts for 30% of your FICO score, making it the second most important factor. Most scoring experts recommend keeping utilization below 30%, and borrowers with the highest scores typically keep it below 10%. Reducing utilization is one of the fastest ways to improve your score. Request credit limit increases, pay balances multiple times per month, or open a new card (if it does not hurt your average account age) to reduce the ratio.