Revolving Credit Utilization: Why It Matters and How to Improve It Fast

Writing a business blog without discussing personal credit and the components that comprise your score feels like teaching someone to ride a bike without wheels. In my career in business finance I can't count the number of times a few tweaks to a client's personal credit score could have boosted the overall appeal of a request to either push it from a decline to an approval, or a good approval to a great approval. Taking the time to understand personal credit is something I feel can't be the importance of cannot be overstated.

Revolving credit utilization—aka how much of your available credit you’re using—is one of the fastest-moving factors in your personal credit score. It can go up or down every month, and it has a big impact.

Available credit refers to the total amount of credit you have access to across your credit cards and revolving lines—minus any balances you’re currently carrying. Your utilization percentage is calculated by dividing your total balances by your total credit limits.

Real-world example: If you have $50,000 in available credit and a $5,000 balance, your utilization is 10% (5,000 ÷ 50,000 = 0.10 or 10%).

Why it Matters:

Lenders want to see that you’re not maxing out your credit, or more specifically that you can manage your credit limits as they deem "responsibly". High utilization ratios (over 30%) can make you look overextended—even if you’re making all your payments on time.

What Is a Good Revolving Credit Utilization Ratio?:

• Under 30% utilization is good

• Under 10% is great

• Over 50%? That’s a red flag

  
  

Tips to Improve:

• Pay down balances strategically before your statement date

• Ask for credit line increases (just make sure they don’t trigger a hard pull)

• Have a plan when making purchases on a credit card

  
  

I know I'm going to sound like a broke record in these posts, BUT monitoring your credit is about the easiest, quickest, and most effective tool to good credit (beyond general good credit habits). Experian is my personal favorite, but with any credit monitoring tool it is important to know what scoring model is being presented, and the ability to see the key components that make up your score.

This is one of the few personal credit factors you can adjust quickly. Use that to your advantage.

Wondering if your credit utilization could impact your ability to get funded? Let’s review it together—no pressure, just practical advice.