Credit utilization is the share of your available credit that you’re using. The Financial Consumer Agency of Canada (FCAC) describes your credit utilization rate, “also called your credit use,” as showing “how much credit you use compared to your credit limit” (FCAC, improving your credit score). It’s one of the habits lenders and scoring formulas look at, and because balances are reported every month, it can change quickly. This page is part of our guides to credit scores in Canada.
How utilization is calculated
Utilization is your balance divided by your credit limit:
A card with a $5,000 limit and a $1,000 balance is at 20% utilization ($1,000 รท $5,000). Across several cards, the total version adds up every balance and every limit: $2,000 owed on $15,000 of combined limits is about 13%.
It applies to revolving credit, the accounts with a limit you can borrow against and repay repeatedly:
- credit cards
- lines of credit, including home equity lines of credit
Instalment loans such as mortgages, car loans and student loans have no limit to compare against, so paying one down doesn’t change your utilization; paying down a card or line of credit does. Instalment balances still appear on your report and count as debt you owe.
Where the 30% figure comes from
The 30% number is the FCAC’s tip, not a published scoring rule: “Try to use less than 30% of your total credit limit.” The FCAC’s own example is a card with a $5,000 limit and a usual balance of $1,000, which it puts at 20%.
The bureaus don’t publish exactly how their formulas treat utilization; the FCAC notes that “Credit bureaus and lenders use different formulas to calculate your score, but they don’t share the exact details.” What the FCAC does say is that lenders look at your utilization rate “to judge how you manage your available credit,” and that if you regularly use a lot of your available credit, “they may see you as a higher risk. This may happen even when you pay off your debts in full every month.” Its other suggestions are to stay under your limit, to have a higher credit limit and use only a small part of it, and to keep your monthly utilization low even if you pay the full balance.
Total vs. per-card utilization
The FCAC’s tip is framed around your total credit limit, but your report also shows each account separately: its balance, its limit, and whether you’ve gone over the limit. Being “close to or over your credit limit” is one of the credit habits the FCAC lists as affecting your score.
| Card | Limit | Balance | Utilization |
|---|---|---|---|
| Card A | $10,000 | $9,000 | 90% |
| Card B | $10,000 | $0 | 0% |
| Card C | $5,000 | $0 | 0% |
| Total | $25,000 | $9,000 | 36% |
The total is 36%, but Card A on its own is close to its limit, and that shows on the report as a card near its limit. Moving part of the balance to Cards B and C would lower Card A’s ratio while leaving the total at 36%; paying the balance down lowers both.
Why the statement balance matters
Your report shows the balance your card issuer sends to the credit bureaus, and the FCAC says the bureaus update your report at least once a month. That balance is whatever the account showed on the day the issuer reported it, which isn’t necessarily the day you pay. The issuer can tell you which date it uses.
Say your issuer reports the balance on your statement date, March 25, and the payment is due in mid-April. If the card shows $2,400 on March 25, that is the balance reported for the month, even if you pay it in full in April and owe no interest. A payment made before March 25 that brings the balance to $200 means $200 is what gets reported instead.
This is why the FCAC’s advice to keep utilization low applies “even if you pay the full balance”: paying in full on the due date avoids interest, but the balance reported earlier in the cycle can still be high. What hurts your credit score covers the other habits that show up the same way, and how to improve your credit score puts the timing in the context of other quick changes.
How your credit limit changes the ratio
Because utilization is a ratio, the limit matters as much as the balance.
| Balance | Limit | Utilization | |
|---|---|---|---|
| Before a limit increase | $3,000 | $6,000 | 50% |
| After a limit increase | $3,000 | $10,000 | 30% |
A higher limit with the same spending lowers the ratio, which is the FCAC’s point about having a higher limit and using only a small part of it. Asking for an increase can involve a credit check; the issuer can say whether it’s a hard or soft inquiry before you agree. The reverse also happens: when an issuer lowers your limit, the same balance becomes a higher ratio. Why a credit limit decreases covers why issuers do that.
The same arithmetic applies to closing a card. The FCAC notes that closing an older account means you “reduce your available credit” and lose older credit history; whether closing a credit card hurts your score goes through that trade-off.
More cards and more available credit
Spreading the same balance over more available credit lowers the ratio mechanically, as the 13% example above shows. Each new card application is a hard inquiry, though, and a new account lowers the average age of your accounts. How long to wait between credit card applications covers the spacing side.
High utilization is also not the same as missing a payment. Payment history is what the FCAC calls “the most important part of your credit score,” and a missed payment can stay on your report for up to 6 years, while a high balance leaves the report once it’s paid down and the next update goes in.
Utilization before a mortgage application
A mortgage lender checks your credit as part of the application, so the balances reported in the months before you apply are the ones it sees. Equifax and TransUnion each keep their own file, so the two reports can differ. Improving your credit score before a mortgage covers the months before an application in more detail.
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Financial Consumer Agency of Canada: How long information stays on your credit report