Getting Utilization Under Control
1. What This Number Actually Measures
Utilization is simply how much of your available revolving credit — cards and lines of credit — you're currently carrying as a balance. A $1,500 balance on a $5,000-limit card puts that card's utilization at 30%.
It's calculated per card and across everything combined, so one maxed-out card drags down your overall number even if your others sit near zero.
2. Why Lenders Care So Much
After payment history, utilization is the single biggest factor in your credit score. A high number tells lenders you're leaning heavily on credit, which reads as elevated risk — and that shapes both your score and how a personal loan lender evaluates you.
3. What Counts as a Healthy Ratio
Canadian scoring models generally reward staying under 30% of your total available credit. If you're chasing the best possible rates, aim for under 10%. Anything near or above 90% is a genuine red flag that can drag your score down hard.
Your utilization resets every time a statement balance gets reported — paying down a card a few days before that date, not just the due date, can meaningfully move the number.
4. The Effect on a Personal Loan Application
A lender reviewing your loan application looks at both your credit report and your existing revolving balances. High utilization can push your score into a worse rate tier — or affect approval outright — even when your income would otherwise easily cover the new payment.
5. How to Actually Bring It Down
Pay down balances before your statement closes rather than waiting for the due date, ask your issuer for a limit increase without adding new spending, spread balances across cards instead of concentrating on one, and think twice before closing an old card — doing so shrinks your total available credit and can push your ratio up.
Splitting one big monthly payment into two smaller ones can keep your reported balance lower throughout the month.
Quick Reference
- Check both per-card and total utilization — both matter to your score
- Under 30% is the general target; under 10% if you want the best rates
- Pay down balances before your statement date, not just the due date
- Keep old, unused cards open rather than closing them
- Ask for a limit increase if your income and history support it