Your credit score is so close to excellent—and we love that for you. But if you’re stuck in that “good” range, your credit utilization ratio might be the thing holding you back. The good news? It’s one of the most controllable factors in your credit score, and understanding how it works is the first step to moving it in the right direction.

Let’s break down what’s really happening with your credit cards and your score.

Understanding Your Credit Utilization Ratio

Your credit utilization ratio is pretty straightforward: it’s the percentage of available credit you’re actually using. Think of it like filling up a gas tank—the more of your available credit you use, the higher your ratio climbs.

Here’s the math: divide your credit card balance by your credit limit, then multiply by 100 to get a percentage. So if you have a card with a $1,000 limit and a $400 balance, that’s a 40% utilization rate on that specific card.

Two Ways to Calculate (And Why Both Matter)

Per-Card Utilization
This is the ratio on each individual card. In our example above, that $400 balance on a $1,000 limit = 40% utilization on that card alone.

Overall Utilization
This is your total across all your credit cards. Let’s say you have three cards: two with $500 limits (both at $0) and one with a $1,000 limit ($400 balance). Your overall utilization is $400 ÷ $2,000 = 20%.

Here’s what’s probably happening with your credit: your overall ratio might look good, but that one card with the balance is dragging down your per-card score. Both matter, and lenders are looking at both.

Why 30% Is the Magic Number

The sweet spot? Keeping your utilization below 30%—ideally even lower if you’re aiming for that excellent credit range. Your overall ratio might already be there, but if one card is maxed out while others sit at zero, it can still hurt your score.

Should You Close Those Other Cards?

Here’s the counterintuitive part: don’t close them. We know it’s tempting to simplify, but closing cards actually increases your utilization ratio. Here’s why: you’re reducing your total available credit while your debt stays the same. That number gets worse, not better.

Instead, keep those three cards open and use them occasionally for small purchases. Pay off the balance in full each month. This strategy keeps your total available credit high (which lowers your ratio) while keeping per-card utilization low.

More Than Just Utilization

Your utilization ratio is powerful, but it’s not everything. Your credit score also depends on:

• Payment history (the biggest factor—always pay on time)
• Age of your credit accounts (older is better)
• Credit mix (having different types of credit helps)
• New credit inquiries (too many in a short time can hurt)

Different scoring models weight these factors differently. FICO Score (used by 90% of lenders) and VantageScore (the free one you see on Credit Karma) can show different numbers—and it’s not unusual to see a higher VantageScore than your FICO.

Your Action Plan

Calculate your per-card utilization on that one card with a balance. Figure out what balance keeps you at or below 30%, and make that your target. Keep those other cards active with small, regular purchases you pay off monthly. Stay consistent with on-time payments across the board.

Moving from good to excellent credit takes time and discipline, but you’re already on the right path. With a focused strategy on utilization and payment habits, you’ll get there.