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Credit utilization is how much of your available credit you’re using. After paying on time, it’s one of the most useful things you can manage to keep your credit healthy, and it responds quickly when you change your habits.
How to calculate it
Divide your balance by your credit limit and multiply by 100:
Utilization = balance ÷ credit limit × 100
FCAC’s example: if your credit limit is $5,000 and you’re using $1,000, your utilization is 20%. Lenders look at utilization on each card and across all your revolving credit combined.
Why it matters
A high utilization can suggest to lenders that you rely heavily on credit, which they may see as higher risk. FCAC recommends trying to use less than 30% of your total credit limit, and notes that this applies even if you pay your balance in full every month. What lenders see is the balance that gets reported, not whether you paid it off a few days later.
Thresholds for common limits
Secured cards and first credit cards often have small limits, so 30% can be a small number. Here’s what it looks like:
| Credit limit | 30% of the limit | 10% of the limit |
|---|---|---|
| $300 | $90 | $30 |
| $500 | $150 | $50 |
| $1,000 | $300 | $100 |
| $2,500 | $750 | $250 |
Practical ways to keep utilization low
- Pay before your statement is produced. The balance reported to the credit bureaus is usually a monthly snapshot. Paying part of your balance mid-cycle lowers it, even if you also pay in full later. Your card issuer can tell you when it reports.
- Use the card for a few predictable expenses rather than large one-off purchases.
- Set up balance alerts. FCAC notes that many financial institutions can alert you when your available credit drops below an amount you choose.
- Keep older cards open. Closing an account reduces your total available credit, which can push your overall utilization up.
- Ask about a higher limit, carefully. A higher limit lowers your utilization only if your spending stays the same. With a secured card, a higher limit usually means a larger deposit.
Utilization isn’t the whole story
Utilization is one factor among several. Paying on time matters more, and a single month of higher utilization usually matters less than a pattern. Focus on steady habits: small balances, paid on time, month after month.
Key takeaways
- Utilization is your balance divided by your limit, on each card and overall.
- FCAC suggests staying under 30% of your total credit limit.
- On a $500 limit, that’s a balance under $150.
- Paying down your balance before your statement date can lower the utilization lenders see.
Thinking about a first card with a small limit? Read how a secured credit card deposit works or see the secured credit card we’re designing.
Sources
- Improving your credit score , Financial Consumer Agency of Canada. Accessed October 20, 2026.
- How credit cards work , Financial Consumer Agency of Canada. Accessed October 20, 2026.
- Paying off your credit card , Financial Consumer Agency of Canada. Accessed October 20, 2026.
This guide is general information for people in Canada and isn’t financial, legal or tax advice. Evolve Capital Credit products are in development and not yet available. Third-party names are mentioned for education only and don’t imply any relationship.