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Credit utilisation is the percentage of your available credit that you’re actually using at any given time, most often talked about for credit cards and overdrafts. If you have a credit card with a £2,000 limit and a £600 balance, your utilisation on that card is 30%. It’s one of the factors credit reference agencies and lenders consider when building a picture of how you manage credit, alongside your payment history and the age of your accounts.
How credit utilisation is calculated
Utilisation is usually worked out per account and then considered across all your revolving credit together.
| Example | Limit | Balance | Utilisation |
|---|---|---|---|
| Credit card A | £2,000 | £600 | 30% |
| Credit card B | £3,000 | £150 | 5% |
| Overdraft | £1,000 | £500 | 50% |
Overall utilisation combines the total balances against the total limits across these accounts, so a single high balance can pull up your overall figure even if your other accounts are barely used.
Why credit utilisation matters
Credit reference agencies often suggest that keeping utilisation lower, sometimes cited as a rough guide of below 30%, is generally seen as more favourable than running accounts close to their limit. This isn’t a fixed lender rule, more a general pattern in how scoring models tend to treat revolving credit, since consistently high utilisation can suggest reliance on credit rather than spare capacity.
For a mortgage or remortgage application specifically, lenders look at affordability directly, your income against your outgoings and existing credit commitments, rather than applying a fixed utilisation threshold. However, high balances close to their limits are still a commitment that gets factored into that affordability assessment, and they can also affect your credit score, which some lenders consider alongside their own criteria.
It’s worth being clear that there’s no official rule setting 30%, or any other figure, as a lender requirement. That figure comes up often in general guidance from credit reference agencies and comparison sites as a rough pattern associated with healthier-looking files, not as something written into mortgage lending criteria. Treat it as a helpful benchmark rather than a target you must hit exactly.
Utilisation and your credit score
Utilisation is one input among several that scoring models use, alongside things like payment history, the length of time accounts have been open, and how many new accounts or searches you’ve had recently. Our guide on how mortgage lenders credit score you explains why there’s no single minimum score that applies everywhere, since each credit reference agency scores differently and lenders apply their own criteria on top.
Does utilisation matter for a bad credit remortgage?
If you already have adverse credit, such as a default or a CCJ, utilisation is a smaller factor compared with the adverse marker itself, but it’s still worth paying attention to. Bringing down card and overdraft balances in the months before you apply can help your affordability figures look clearer to a lender, and it may support a somewhat better score alongside the rest of your history. It won’t offset an existing default or CCJ, but it’s a practical, free step within your control.
How utilisation is different from the amount you owe overall
It’s worth separating two things that sound similar. Utilisation is about how close you are to your limits on revolving credit, while your overall debt level is about the total amount you owe across everything, including any fixed loans. You could have relatively low overall debt but still show high utilisation on one card that’s near its limit, or the reverse, a large loan balance with low utilisation on cards you barely use. Lenders and scoring models tend to look at both separately, which is why paying down one maxed-out card can help even if your total borrowing hasn’t changed much.
Practical ways to manage utilisation before a remortgage
- Pay down credit card and overdraft balances where you can, rather than just meeting minimum payments
- Avoid opening several new credit accounts shortly before applying, since new accounts and the searches behind them can affect your file
- Check whether a credit limit increase (used carefully, not spent) can lower your percentage utilisation, though this isn’t right for everyone
- Review your accounts across all three credit reference agencies, since utilisation is calculated per account and lenders may see slightly different figures depending on which agency they use
Our guide on how to improve your credit score before you remortgage covers other steps alongside utilisation.
Timing matters here too. Utilisation is generally based on the balance shown on your most recent statement date for each account, not a live, constantly updating figure, so paying down a balance a few days before your statement date can make more difference to how it’s reported than paying the same amount just after. If you’re not sure when your statement date falls, your card provider’s app or paper statement will show it.
What this means for remortgaging with adverse credit
Utilisation is one part of a bigger picture, and it won’t undo the effect of a default, missed payments or a CCJ on its own. What it can do is give an adviser and a lender a slightly clearer affordability picture if you bring balances down before applying, which is particularly useful if you’re self-employed and already facing closer scrutiny of income and outgoings, or if you’ve been flagged for too many recent credit searches alongside high balances. Managing utilisation is a sensible habit to build in the months before you apply, rather than something to fix the week before.
Frequently asked questions
What is a good credit utilisation percentage?
There's no single fixed figure, but keeping usage well below your limit is often suggested as good practice by credit reference agencies. Lenders set their own criteria and look at your overall accounts and affordability too, not just one percentage.
Does credit utilisation affect a mortgage application directly?
Lenders don't apply a fixed utilisation rule, but high balances relative to your limits can affect your credit score and how affordability is assessed, since existing card and overdraft balances count as ongoing commitments alongside your other outgoings. Paying balances down in the months before applying can help both your score and how your affordability figures look to an adviser.
Does utilisation reset every month?
Utilisation is usually calculated from the balance shown on your statement date for each account, so it can move up and down month to month depending on your spending and repayments, rather than being a single fixed figure. Paying down a balance shortly before your statement date can make more difference than paying the same amount just after.
Is credit utilisation the same for all types of credit?
It's most commonly discussed for revolving credit, such as credit cards and overdrafts, where there's a set limit. Fixed loans, such as personal loans or mortgages, are usually looked at differently, based on the outstanding balance and repayment history rather than a percentage of a limit.