How to manage your credit utilisation

Find out why your credit utilisation matters, plus work out your own utilisation with our calculator

Man looking at credit card

What is credit utilisation?

Your credit utilisation is the percentage of your total credit limit you are using. It’s also known as your “balance-to-limit ratio”, or “utilisation rate”.

Your credit utilisation is an important indicator of credit risk. A high credit utilisation can give lenders the impression that you’re relying on credit – this could negatively affect your credit score.

To calculate your credit utilisation for an individual account, divide the balance by the credit limit for that account.

So, if you have a credit limit of £5,000 and your balance is £2,500, your credit utilisation is 50%.

Total credit utilisation

Credit utilisation doesn't just apply to individual accounts – it also works across all your credit products.

To calculate your overall utilisation, divide the total balances on all your credit accounts by your total credit limits.

For example, if you have a total of £5,000 in credit available on two accounts, and a balance of £2,000 on one and £500 on the other, your total credit utilisation is 50%.

Credit utilisation calculator

You can use our credit utilisation calculator to work out your utilisation on an individual account, as well as your total credit utilisation.

Simply tell us the credit limit for each account – plus how much you owe on each one – and we'll work out the rest.

Credit utilisation calculator

Tell us the credit limit for each account, and how much you owe on each one, and we'll work out your overall credit utilisation

£0 £20,000

You can find your credit limit on your statement or online account

£0 £20,000

You can find your credit limit on your statement or online account

£0 £20,000

You can find your credit limit on your statement or online account

This doesn't look quite right

Your overall credit utilisation is

It looks like you're using a pretty healthy amount of your total available credit. Keep paying down your debts, as keeping your credit utilisation low will help your credit score.

You're using more than half of your total available credit. Try to pay down your debts so you owe less than half your total credit limit - this will help your credit score.

Credit Monitor can help you keep an eye on your credit utilisation, plus give you tips to help improve your credit score, all for free.

How does credit utilisation affect your credit score?

Your credit utilisation will have an impact on your credit score.

Lenders see high credit utilisation as a sign you may be experiencing financial difficulties – or that you’re relying on credit – so it is a strong indicator of lending risk.

High credit utilisation can have a negative impact on your credit score and mean lenders might be reluctant to lend you more money.

What is seen as a good credit utilisation?

As a rule of thumb, aim to use no more than 50% of your available credit – this applies to each individual account and your total credit utilisation ratio. 

Common misconceptions about credit utilisation

Some people may think that taking out multiple credit products and only using a small amount of the available credit will improve their credit score, but unfortunately it’s not as simple as that.

Applying for too much credit in a short space of time, or if your total credit is a high multiple of your monthly income, can make lenders reluctant to lend to you.

Also, credit utilisation is just one factor that affects your credit score so don’t assume that simply keeping it low will guarantee a high credit score. Paying bills and debt repayments on time, being on the electoral roll, not moving house too often and not being financially associated with someone with a poor credit record are as important – if not more important – than your credit utilisation rate.

Tips on how to effectively manage credit utilisation

Pay down debt 

You will reduce your credit card balances by paying more than the minimum each month. If you’re struggling to repay your debts, speak to a debt adviser such as StepChange(0800 138 1111), or National Debtline (0808 808 4000) which is run by the Money Advice Trust.

Consolidate your debts

If you have several credit accounts and owe money on them all, it might be worth thinking about consolidating your debts. If you have multiple credit cards, a 0% interest balance transfer credit card is a good place to start – you can transfer existing debts to these cards and not pay any interest for a set period. This could give you space to start paying down your debts, reducing your credit utilisation. Just remember you’ll need to pay a fee to transfer your balance, and make sure you can pay it off during the 0% interest period.

Ask for a higher credit limit 

You can also reduce your credit utilisation rate by asking for a credit limit increase on one of your accounts. For example, if you owed £5,000 on a credit card with a £10,000 limit, your credit utilisation rate would be 50%.

But if the credit card limit was increased to £15,000, your credit utilisation rate would be close to 30%. The key is to use this credit responsibly and not to increase your spending once you have a new limit.

But… don’t apply for too much credit

Bear in mind that taking out a consolidation loan or a 0% balance transfer credit card, or applying for a higher credit limit on an existing credit card, will all involve a “hard search” on your credit report. This can negatively affect your credit score, particularly if you have applied for several credit products in a short space of time.

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