Credit utilization ratio: what percentage of your limit to use in Canada
Short answer: your credit utilization ratio is your card and line of credit balances divided by your total credit limits. The Financial Consumer Agency of Canada says to try to use less than 30% of your total credit limit. A $1,000 balance on a $5,000 limit is 20%. Lenders can see high use as a risk even if you pay in full every month, so the balance on the card matters, not only whether you pay it.
Credit utilization calculator
Overall and per-card utilization
| Account | Balance | Limit | Used |
|---|
30% is the FCAC guideline. The target field is your own choice; the FCAC simply says to use a small portion of your limit. Scoring formulas are private to the credit bureaus and lenders, so treat this as a guide, not a score prediction.
The formula, and why it matters
Utilization = total balances on revolving credit ÷ total credit limits × 100.
The FCAC calls it your credit utilization rate, or credit use, and puts it right after payment history in its list of what shapes your score. Its own example: a card with a $5,000 limit and a usual balance of $1,000 is at 20%. Its guidance is to stay under 30% of your total limit, avoid going over any limit, and aim for a higher limit that you only use a small part of.
Your credit report, from Equifax or TransUnion, lists every account with its balance and its limit. So two things are visible to a lender: the overall ratio across everything, and how full each individual card is.
| Total limits | 30% of limit | 20% | 10% |
|---|---|---|---|
| $2,000 | $600 | $400 | $200 |
| $5,000 | $1,500 | $1,000 | $500 |
| $10,000 | $3,000 | $2,000 | $1,000 |
| $20,000 | $6,000 | $4,000 | $2,000 |
What the bureaus actually see
Canada has two main credit bureaus, Equifax and TransUnion. Lenders send them information about your accounts, and the FCAC says the bureaus update your credit report at least once a month. For each card and loan, the report can show when you opened it, how much you owe, whether you pay on time, and whether you have gone over your limit.
The bureaus and lenders use their own formulas and do not publish the exact weights. What the FCAC does list as common factors includes carrying a balance, how much debt you owe, and whether you are close to or over your credit limit. Its example is blunt: two people each have a card with a $5,000 limit. One regularly owes $4,500 (90%), the other owes $1,000 (20%). Lenders may see the first person as the higher risk, even if both pay on time.
Scores in Canada usually range from 300 to 900, and the score you see may differ from the one a lender pulls, because a lender may weigh some information more heavily. That is why a single "perfect" utilization number does not exist. The useful habits are the same either way: stay well under your limits, and keep them that way all month, not just on the due date. Checking your own report does not affect your score, so look at both bureaus once in a while. Our free credit score guide shows how.
Worked example: 30% overall, 80% on one card
Priya has two cards.
- Card 1: $2,400 owing on a $3,000 limit. $2,400 ÷ $3,000 = 80%.
- Card 2: $600 owing on a $7,000 limit. $600 ÷ $7,000 = 8.6%.
- Overall: $3,000 ÷ $10,000 = 30%, right at the line the FCAC suggests staying under.
Her overall number looks borderline, and one card is nearly maxed. If she puts $1,500 toward Card 1, it drops to $900 ÷ $3,000 = 30%, and her overall ratio falls to $1,500 ÷ $10,000 = 15%. Same total limits, same cards, half the utilization. Paying down the fullest card first also trims the account a lender is most likely to notice.
If Card 1 also has the higher interest rate, that $1,500 does double duty. Our minimum payment guide shows what a balance like $2,400 costs when only the minimum goes in.
The pay-in-full surprise
Plenty of people pay their card in full every month and still see a high utilization figure. The FCAC addresses this directly: lenders may see you as a higher risk if you regularly use a lot of your available credit, even when you pay off your debts in full every month. Its advice is to keep your monthly utilization low even if you pay the full balance.
The reason is timing. The balance a lender reports is a snapshot of what is on the card at that moment, not what you pay after. If you put $4,000 of monthly spending on a $5,000 card and pay it all at the due date, the snapshot can still show 80%. Two simple fixes: make a payment partway through the month so the balance never builds that high, or ask for a higher limit so the same spending is a smaller share.
What closing a card does to your ratio
Closing a card removes its limit from the bottom of the fraction. Say Priya also had a third card with a $5,000 limit and no balance. With all three cards, she has $3,000 owing on $15,000 of limits: 20%. Close the empty card and it becomes $3,000 on $10,000: 30%, without spending a dollar more.
The FCAC says keeping an old account open, even at a zero balance, helps you keep your credit history and improves your utilization rate. It suggests keeping it if there is no annual fee, it is easy to manage, and you can use it now and then to keep it active. More in does closing a credit card hurt your credit score.
Ways to lower your utilization, compared
| Option | Effect on the ratio | Trade-off |
|---|---|---|
| Pay down the fullest card first | Lowers overall and per-card use | Needs cash; the best use of it if that card also has the highest rate |
| Pay partway through the month | Lower balance whenever it is reported | One more payment to remember; set an alert |
| Ask for a higher limit | Bigger denominator, same spending | Only helps if spending stays the same. Ask the lender whether the request involves a hard credit check |
| Keep old no-fee cards open | Keeps their limits in the total | Use them occasionally so they stay active |
| Spread spending across cards | Avoids one maxed-out card | More statements to track |
Utilization changes as soon as balances change, so it is one of the quicker parts of your profile to improve. Payment history still matters most, according to the FCAC. If your score moved and you are not sure why, start with why your credit score dropped, check what counts as a good credit score in Canada, and find more tools on the calculators page.
Questions people ask
What is a good credit utilization ratio in Canada?
The Financial Consumer Agency of Canada says to try to use less than 30% of your total credit limit, and to use only a small portion of a higher limit. For example, a $1,000 balance on a $5,000 limit is 20%.
How do I calculate my credit utilization?
Add up the balances on your credit cards and lines of credit, divide by the total of their limits, and multiply by 100. $3,000 owing on $10,000 of limits is 30%.
Does paying my credit card in full mean my utilization is low?
Not necessarily. The FCAC says lenders may see high use as a risk even if you pay in full every month, and advises keeping monthly utilization low even when you pay the full balance. A mid-month payment keeps the balance lower.
Is utilization per card or overall?
Your credit report lists the balance and limit for each account, so a lender can see both your overall ratio and how full each card is. A single card near its limit is worth paying down first.
Does closing a credit card raise my utilization?
It can. Closing a card removes its limit from your total. $3,000 owing on $15,000 of limits is 20%; close a $5,000 card and it becomes 30%. The FCAC notes keeping an old no-fee account open helps your utilization rate.
How fast does lowering utilization help my credit score?
Utilization reflects your current balances. Lenders send account information to Equifax and TransUnion, and the FCAC says the bureaus update your report at least once a month, so a lower balance can show up within a reporting cycle or two. Payment history remains the most important factor, according to the FCAC.
The read-only coach tracks each card against its limit through the month and nudges you when a mid-month payment would keep your utilization under the line you choose.
Sources
Financial Consumer Agency of Canada, Improving your credit score (credit utilization rate, the under 30% guideline and $5,000 example, high use seen as risk even when paid in full, keeping old accounts open, payment history as the most important factor) and Credit report and score basics (Equifax and TransUnion, monthly report updates, common score factors, the $4,500 vs $1,000 example, 300 to 900 range).