Credit 101

Reader Question: Is 10% the Best Debt-to-Limit Ratio for My Credit Score?

Comments 1 Comment

Credit scoring models are full of eccentricities and minutia that can make a big difference in your final score. Debt-to-limit calculation (which accounts for 30% of your credit score) is one of those confusing areas. Here is Jed’s question:

I have read several sources who recommend using only 30% of your credit limit to enhance credit scores.

I recently read TWO articles that now recommend using less than 10% of the credit to best enhance the credit score.

Which (if either) is correct?  What is the recommended credit line usage limit to help credit scores?

Simple Answer: under 10% (and more than 0%) is the absolute
best for your credit score.

For example: you would be earning the most score points in this category if you had four cards with a total credit limit of $15,000 and a total credit card balance level between $1 and $1,500.

But this is one of those "great idea, or greatest idea" sorts of things. A 30% DTL level would be a credit score improvement if you had previously been over 50%. The credit scoring model assigns fewer points toward your credit score the higher your debt-to-limit ratio is over 10%. 

remember, this is your statement balances on the cards vs. the total
credit limits. The individual balance ratio on cards has some value too, but it is really the total ratio for all cards on your credit report that is important.

Note: You can still have a high debt-to-limit ratio even if you pay
your credit cards off in full each month.

Some consumers looking for a quick credit fix stop using their credit cards except for a couple very small purchases a few months before a loan application as a way to reduce their debt-to-limit ratio and improve their scores.

Next question? You can email our team of credit and finance experts at anytime.

Emily Davidson – A former TransUnion insider and a member of’s expert team. Emily writes about credit reports, credit cards, loans and personal finance as the moderator.   

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Kiran

    Hey Emily,
    Thanks for the highly informative article. I had a query regarding when the debt is calculated. You said your monthly balance is taken as the debt. What happens in the following case.
    I have a limit of 1000 dollars, every week of the month I spend 900 dollars and paying it off as soon as the amount shows up online on the bank site, doing this i end up spending 3600 in the month, but by the time the cut off date comes up for the card I have a balance of about 50 dollars only. So eventually the monthly bill of the card shows a balance of say 50$.
    So in this case what is debt taken for the month. 3650 or just 50

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now

Stay connected to our experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.