Credit utilization is the percentage of your available credit you're currently using — calculated as total credit card balances divided by total credit limits. Keeping utilization under 30% (ideally under 10%) is the single highest-leverage credit-score factor.
Credit utilization is the second-most-weighted FICO score factor (~30% of the score), behind only payment history. It's calculated separately for each card and aggregated across all cards. A single card maxed near its limit can hurt your FICO even if your total utilization across all cards is low. The reporting cycle matters: utilization is reported on your statement date, not your due date. To improve your utilization-driven FICO, pay your card down BEFORE the statement closes, not just before the due date. Utilization recovers quickly. A high-utilization month followed by a paid-off statement immediately drops utilization on the next reporting cycle. Unlike payment history (which takes years to recover from a late payment), utilization is a current-snapshot factor. For borrowers preparing to apply for a major loan (mortgage, auto loan, business loan), the 60-90 day window before application is when paying down credit cards has the most leverage. Sub-10% utilization can produce 20-50 FICO points of improvement in 1-2 statement cycles. The CFPB's credit report and score guide (https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/) explains how credit utilization affects scoring and how to monitor it. The Federal Reserve's Consumer Credit G.19 release (https://www.federalreserve.gov/releases/g19/) tracks aggregate revolving credit data, providing macroeconomic context for credit card utilization trends.
Under 30% on each card and overall is the commonly-cited threshold. Under 10% is excellent. 1-5% reported (not zero — some activity beats no activity) optimizes FICO for borrowers preparing for major credit applications.
Paying off the FULL balance before the STATEMENT date is what reduces reported utilization. The statement date is typically a few weeks before the due date. Pay early — before the statement closes — to optimize utilization-driven FICO.