Credit utilisation is one of the factors that UK credit reference agencies use when calculating credit scores. It measures how much of a person's available revolving credit is currently in use. Despite being widely discussed, the exact way each agency treats utilisation differs, and much of the detail remains undisclosed.
This guide explains what credit utilisation is, how it is calculated, what the known thresholds are, and where common confusion arises — all within the UK context.
Quick Answer (Read This First)
Credit Utilisation Ratio is the percentage of your available revolving credit (e.g., credit cards) you are currently using. It is calculated by dividing Outstanding Balances by Total Credit Limits.
- Formula: (
£500 Balance/£1,000 Limit) = 50% Utilisation. - Scope: Applies to revolving credit only (Credit Cards, Overdrafts). It does not include instalment loans like mortgages.
All three UK agencies (Experian, Equifax, TransUnion) factor this into their scores. TransUnion explicitly weights it at 20% (VantageScore 3.0).
IMPORTANT
The "Goldilocks" Zone: While keeping utilisation low is good, 0% is not always optimal. Lenders want to see active, responsible usage. Conversely, utilisation above 75-90% sends strong negative signals of financial stress.
How the System Works
Credit card issuers report your balance and limit to CRAs typically once per month, usually around your statement date.
- Snapshot Timing: The balance reported is the one on that specific day. even if you pay it off in full 2 days later, the "Snapshot" has already been sent to the CRA.
- Scoring Models: Each CRA has its own secret recipe.
- TransUnion: ~20% of score.
- Experian/Equifax: Undisclosed weightings, but significant.
- Data Consistency: Not all lenders report to all three agencies, so your utilisation figure might differ between your Experian, Equifax, and TransUnion reports.
Key Rules, Thresholds, and Timelines
While there is no "Legal Limit" for utilisation, industry analysis reveals clear thresholds that affect your score.
The 30% Threshold
Experian UK recommends keeping utilisation below 25–30%.
- Impact: Analysis suggests keeping balances under 30% can be associated with a healthy score boost.
- Origin: This aligns with global lending standards that view <30% as "Low Risk".
The 50–75% "Amber Zone"
Utilisation between 50% and 75% is widely regarded as a warning sign.
- Signalling: It suggests you are becoming reliant on credit.
- Equifax Guidance: Published rules often flag >50% as the start of negative scoring impacts.
Above 90% (Red Flag)
Using nearly all your available credit is a major negative indicator.
- Impact: Can result in significant score drops (e.g., estimated -50 points on some scales).
- Risk: Lenders view this as "maxed out" and high risk for default.
The 0% Dilemma
Why is 0% not perfect?
- Lender Logic: If you never use your credit, there is no evidence that you can manage debt responsibly.
- Strategy: Low, active usage (e.g., 1-10%) is often better than a "Dormant" 0% profile.
Common Points of Confusion
"Paper" Losses vs Real Debt
If you pay your card in full every month, you report 0 debt to yourself, but the CRA might see a balance.
- Reason: If your statement generates on the 1st with £500, and you pay it on the 25th, the CRA sees the £500 snapshot from the 1st.
- Fix: To show 0% (or very low), consider paying off the balance before the statement date.
Total Limit Myths
"A higher limit is always better" isn't strictly true.
- Yes, it lowers your percentage (e.g., £500 balance on £10k limit is only 5%).
- BUT: Lenders also assess "Total Available Credit". If you have access to £50,000 unsecured credit, some lenders may worry you could get into debt instantly, posing an affordability risk.
Instalment Loans
Your mortgage balance or car finance does NOT count towards your credit utilisation percentage. Those are separate assessment categories.
Important Exceptions
- Overdrafts: Experian analysis suggests some overdrafts aren't counted in the standard "Utilisation %" metric, though they are "Unsecured Debt". This varies by agency.
- Closed Accounts: Closing an old, unused card removes its credit limit from your total.
- Example: You have £2k debt on £10k total limit (20%). You close a £5k limit card. New total limit is £5k. Utilisation jumps to 40%.
- Inactive Closure: Issuers can close cards if you don't use them (usually after 12 months), unwittingly spiking your utilisation.
What This Means in Practice
- Check the Snapshot: Don't stress about the daily balance. Only the reported monthly figure matters.
- Aim for <30%: Treat 30% as your "Soft Limit" and 75% as your "Hard Limit".
- Don't Fear Usage: Using a card for groceries and paying it off shows better management than a dusty card in a drawer.
FAQ
What is credit utilisation?
The percentage of your revolving credit limit you are currently using. Balance ÷ Limit = Utilisation %.
Is 0% utilisation bad?
It's not "bad", but it's likely less optimal than 1-5%. Zero usage gives lenders no data on your repayment discipline.
How often is it updated?
Monthly, usually around your statement date. It is not real-time.
Does closing a card hurt my score?
It can. By removing that card's credit limit from your "Total Available Credit", your overall utilisation percentage will mathematically increase if you have balances elsewhere.
Do all agencies see the same number?
No. If your Amex reports to Experian but not TransUnion, your TransUnion utilisation calculation will completely ignore that card's limit and balance.
For more details on improving your rating, visit our Credit Scores Hub or read about How to Get Your Statutory Credit Report.
