FICO credit utilization ratio

Your credit utilization ratio on revolving accounts-the percentage of your available credit you’re using-is an important factor in your FICO® Scores. Using a high percentage of your available credit means you’re close to maxing out your credit cards, which can have a negative impact on your FICO Scores. On the other hand, using a low percentage of your available credit can have a positive impact. In some cases, a low credit utilization ratio will have a more positive impact on your FICO Scores than not using any of your available credit at all.

It’s also important to note that your current account balance isn’t necessarily the balance that shows up on your credit report and factors into your FICO Scores. Your account balance on your credit report will reflect the account balance your lender reported to the credit bureau (typically the balance from your latest monthly statement). So even if you pay your credit card balances in full each month, your account balance won’t necessarily show on your credit report as $0—Read more at myFICO.