Direct answer
Credit utilisation compares reported revolving balances with revolving credit limits. Calculate each account by dividing its reported balance by its limit, and calculate overall utilisation by dividing the sum of all reported revolving balances by the sum of all revolving limits.
It is one component of credit-risk scoring, not a complete credit score. The result does not tell you how many points a payment will add, whether a lender will approve an application, or when a changed balance will appear on a credit report.
The formulas
Per-account utilisation = reported balance ÷ credit limit × 100Overall utilisation = total reported revolving balances ÷ total revolving limits × 100Overall utilisation is not the simple average of card percentages unless every limit is identical. It is a limit-weighted ratio produced from the combined totals.
Example
| Account | Limit | Reported balance | Utilisation |
|---|---|---|---|
| Card A | 5,000 | 1,000 | 20.00% |
| Card B | 3,000 | 1,500 | 50.00% |
| Combined | 8,000 | 2,500 | 31.25% |
To model a 20% overall target, multiply the combined limit of 8,000 by 20%, giving a target reported balance of 1,600. The difference from the current 2,500 balance is 900.
That 900 could be distributed across accounts in different ways. Overall utilisation changes by the same total payment, but each account’s individual ratio changes differently.
Why a single threshold is misleading
“Keep utilisation below 30%” is widely repeated as a rule of thumb, but FICO explicitly says its data does not support the implication that a score automatically falls when utilisation crosses 30%. Scoring models evaluate the level of revolving use alongside payment history, account age, recent credit activity and other information.
| Statement | What it means |
|---|---|
| Lower utilisation is generally associated with lower risk | A directional relationship, not a guaranteed number of points |
| Overall and individual ratios can both matter | A low combined ratio does not hide a heavily used individual card |
| Reported balance can differ from current balance | Lenders report on their own schedules |
| 0% is not a universal optimisation target | FICO notes that a small reported balance can score differently from no reported revolving balance |
What-if scenarios
Make a payment
A payment lowers the selected balance. The ToolBullet target-payment result shows the total amount needed to reach the user-entered overall percentage, then offers an illustrative allocation to the highest-utilisation accounts first. That allocation is not a scoring recommendation.
Increase a limit
If a lender raises a limit and the reported balance stays unchanged, the ratio falls. A requested limit increase may involve an eligibility check or other consequences, which the calculator does not assess.
Close a zero-balance account
Removing a zero-balance card removes its available limit. If balances elsewhere stay the same, the overall ratio rises. The tool permits this scenario only for a zero-balance account so it does not silently discard debt.
Important limitations
- Use reported revolving balances and limits, not instalment-loan balances.
- An over-limit balance can produce a ratio above 100%; ToolBullet does not clamp it.
- Joint, authorised-user and business accounts may be reported differently.
- Different scoring models and lenders can treat the same report differently.
- The calculator makes no prediction of approval, score movement or reporting date.