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I'm confused on how and when credit card utilization is calculated for one's credit score. Is the credit card utilization percentage calculated based on the maximum balance you had in a given month? Or the balance at the end of the month? Or some other metric? Here's an example to illustrate my question:

Say you have a credit card with a limit of $2,000. Every month you have a bill for $200 that you charge to this card. But you pay it off within hours or minutes of it being charged. So for the majority of the time, and at the end of the month, you have a balance of $0.

Will your utilization percentage be 10%, because the maximum you had at one point was $200 / $2,000 = 10%? Or would it be 0% if your score is calculated after you have paid it off? Is there a certain time (e.g. the last day of the month) that your balance is checked, and your utilization percentage is calculated?

Eric Alberson
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1 Answers1

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If you look at a credit report, it will contain lists of balances from various credit cards. Each of them chooses when to report and how frequently; most commonly it is the statement balance (ie, the balance that showed up on your statement), but different credit card companies may follow different practices - call your lender(s) to verify, or pull a free credit report in the middle of the month and compare those balances to your statement balances.

Do not assume that if you pay in full the balance due it will be zero - it will only be zero if 1) they only report statement balances and 2) you pay in full before the statement is generated. (Although, if you're only using 10% of your credit, I wouldn't worry about it.)

Some links I've read that explain it in more detail; most seem to assume it's always statement balance, but as the first forum discussion shows, it is not always that date, just usually.

  • A discussion on the MyFICO forums showing various dates from different CC lenders.

An article from Savvy on Credit that explains how you can have a balance while paying in full every month

Experian explains how it works as well.

Joe
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