Day 27: Keep Your Credit Utilization Under 30% (Or the Credit Scoring Gods Might Frown Upon You)

Get the Most Out of Your Amazon Prime Membership

Maximize the value of your Amazon Prime membership by uncovering 10 lesser-known benefits that can transform your shopping, streaming, and saving experience.

Learn more

Ah, credit utilization—one of the most misunderstood, yet critically important aspects of your credit score. It’s like the Goldilocks of personal finance. Use too much of your available credit, and you’re labeled “high-risk.” Use too little, and you might not get the full benefits. You need to get it just right—by keeping your usage under 30% of your credit limit.

Let’s break it down with a little humor (because why not?).

What is Credit Utilization?

Imagine your credit card is like a buffet. You’ve got a big plate (your credit limit), and you’re allowed to load it up. But if you pile on too much food (debt), the chef (credit bureaus) starts judging you. They think, “This person has no self-control. Are they even chewing?”

Keeping your plate at 30% full tells the chef you’re a reasonable eater. You’re enjoying the buffet, but you’re not about to bankrupt the kitchen.

Why Does It Matter?

Credit scoring models love a responsible spender. Keeping your credit utilization under 30% tells lenders, “Hey, I can borrow money and still have self-control.” It’s a win-win—you get a healthy credit score, and they feel confident you won’t ghost them when the bill comes due.

Here’s a fun fact: Credit utilization makes up about 30% of your credit score. That’s a big slice of the credit pie (don’t worry, it’s calorie-free).

How to Stay in the Sweet Spot

1. Know Your Limit

First, find out your credit limit. No judgment if you have to dig through emails or log into your account to find it—we’ve all been there.

2. Do the Math

Multiply your credit limit by 0.3. That’s your target. For example, if your limit is $5,000, aim to keep your balance under $1,500.

3. Make Multiple Payments

If you’re a spender (no shame in loving the occasional splurge), consider making multiple payments each month. This keeps your balance low, even if you’re using your card frequently.

4. Ask for a Credit Limit Increase

Pro tip: If you’re disciplined, requesting a higher credit limit can instantly lower your utilization percentage. Just don’t go on a spending spree—remember, we’re playing chess, not checkers.

The 30% Rule Is a Guideline, Not Gospel

Want to go above and beyond? Aim for under 10%. Credit bureaus see this as peak responsibility. Think of it as getting an A+ instead of just passing the class.

A Quick Recap

• Credit utilization = balance ÷ limit × 100.

• Stay under 30% for a healthy credit score.

• Stay under 10% if you’re an overachiever.

Now, go forth and master the art of responsible borrowing. Your credit score—and future self—will thank you. And remember, nobody likes the person who takes all the shrimp from the buffet. Keep it balanced, my friends!