Key takeaways
- Utilization is typically balance divided by credit limit on revolving accounts.
- Issuers report on a cycle. The score often sees the statement balance, not yesterday’s payoff.
- Closing a card can raise utilization by shrinking total limits.
Credit-score folklore says “keep utilization under 30%.” The mechanism is simpler: bureaus receive a snapshot. If your $10,000 limit card reports $4,000, that card is at 40% even if you pay it two days later.
Timing
To show a lower number, the practical lever is a lower balance when the issuer reports, often around the statement date. Paying in full by the due date still avoids interest. It may not change the snapshot already sent.
Closing cards
A paid-off card still contributes its limit to the denominator. Close it, and the same remaining balances look larger. Age of accounts is a separate factor. None of this is a reason to carry high-interest debt on purpose.
Scoring models differ (FICO vs Vantage). Lenders may use a different version than the free app.
