Credit Utilization
Credit utilization is the percentage of your available credit limits you are currently using — a $500 balance on $2,000 of limits is 25%. It drives about 30% of a FICO score, second only to payment history; staying below 30%, and ideally under 10%, protects the score.
Utilization is the fastest lever in credit scoring: unlike payment history it has no memory, so lowering it shows up in your score within one or two statement cycles.
How it's measured. Bureaus see the balance your issuer reports on the statement closing date — not what you owe after paying the bill. Both per-card and overall utilization matter: one maxed-out card hurts even if your total is low.
Example. A newcomer's first card often has a $500 limit. A $300 phone purchase alone pushes utilization to 60% — high enough to suppress a young score by 20-40 points. Paying the balance down to $40 before the statement closes reports 8% instead.
Tactics. Pay before the statement date, ask for credit-limit increases every 6-12 months (many issuers do this with a soft pull), and keep old no-fee cards open so their limits keep padding the denominator.
Common mistakes: confusing "pay in full by the due date" (avoids interest) with "report a low balance" (helps the score) — you can do the first and still report 90% utilization. Full walkthrough: credit utilization explained for newcomers.