When it comes to your credit score, one small percentage can have a big impact: your credit utilisation. But what exactly is it – and why do lenders care so much about it? At ClearScore, we’re here to break it down simply, so you can see how it works and what you can do to stay in control.
Credit utilisation is the percentage of your available credit that you’re currently using. For example:
If you have a credit card with a £2,000 limit, and you’ve spent £500, your credit utilisation is 25%.
If you’ve spent £1,800 of that £2,000 limit, your utilisation jumps to 90%.
It’s basically a way of showing lenders how reliant you are on the credit that’s available to you.
Lenders look at this number to understand how you manage borrowing. A lower percentage usually suggests you’re not too dependent on credit, which makes you appear less risky. If your credit utilisation is high – say you’re close to maxing out your credit card – it might suggest you’re struggling financially, even if you’re making payments on time. This could make lenders think twice before offering you more credit.
There’s no single “magic number,” but as a rule of thumb, it’s best to keep your credit utilisation below 30%. So, if you have a £1,000 limit, try to keep your balance under £300. This doesn’t mean you should never go above this – life happens – but consistently staying under can help keep your credit score in good shape.
Here are a few simple ways to keep things balanced:
Pay more than the minimum – Reducing your balance faster lowers your utilisation and helps you pay less interest.
Spread spending across accounts – If you have more than one credit card, you could spread purchases instead of loading one card close to its limit.
Ask for a credit limit increase – If you can manage credit responsibly, a higher limit (with the same spending) will reduce your utilisation percentage.
Keep old accounts open – Closing a card reduces your total available credit, which could push your utilisation up.
When you log into your ClearScore account, you’ll see your current balances and limits. This makes it easy to track your credit utilisation and understand how it affects your credit report. We’ll also give you personalised insights on ways to improve your score – including how to manage your credit usage more effectively.
Your credit utilisation is one of the simplest parts of your financial picture – but it can make a big difference to your credit score. By keeping an eye on it and making small changes, you’ll be in a stronger position the next time you apply for credit.