Credit Utilization Rate in Canada — What It Means for Your Score

Credit utilization is one of the biggest factors in your Canadian credit score. Keep it under 30% to protect your Equifax and TransUnion ratings.

What Is Credit Utilization?

Credit utilization is the percentage of your available credit that you're currently using. It's calculated by dividing your total outstanding credit card balances by your total credit limits across all cards.

Formula: Credit Utilization = (Total Balances ÷ Total Credit Limits) × 100

Example: $1,500 balance on a $5,000 limit card = 30% utilization.

How Utilization Affects Your Credit Score in Canada

Credit utilization accounts for approximately 30% of your Equifax and TransUnion credit scores in Canada — making it one of the two most important factors (alongside payment history). Higher utilization signals financial stress and increases perceived lending risk.

Utilization Rate	Score Impact	Lender Perception
1%–9%	Excellent boost	Very low risk
10%–29%	Good — minimal impact	Low risk
30%–49%	Slight negative	Moderate risk
50%–74%	Significant negative	High risk
75%–100%+	Major negative	Very high risk

The 30% Rule — And Why Lower Is Better

The widely cited rule in Canada is to keep credit utilization below 30%. But research shows that scores improve even more at under 10%. If you're applying for a mortgage, car loan, or want the best possible credit score, aim for 1%–9% utilization. Pay your balance down before your statement closes each month — that's when balances are reported to Equifax and TransUnion.

Per-Card vs Overall Utilization

Both your overall utilization across all cards and your utilization on individual cards matter. A card at 90% utilization hurts your score even if your other cards are at 0%. Try to keep each individual card under 30%, not just your combined average.

How to Lower Your Credit Utilization

• Pay down balances — The most direct fix. Pay before your statement closing date.
• Request a credit limit increase — More room = lower utilization percentage, without changing your balance.
• Open a new card — Adds available credit, lowering overall utilization (but causes a hard inquiry).
• Make multiple payments per month — Pay mid-cycle to keep reported balance low.
• Distribute balances across cards — Avoid maxing one card; spread spending across multiple cards.

The Timing Trick — Pay Before Statement Closes

Equifax and TransUnion receive your balance information at the time your statement is generated — not when payment is due. If you pay your balance in full but pay after the statement date, the high mid-cycle balance has already been reported. For maximum score benefit, pay down your balance before your statement closing date so the reported balance is low.

Does KOHO Affect Credit Utilization?

No. KOHO is a prepaid card — it doesn't have a credit limit and doesn't report to Equifax or TransUnion as a credit account. Spending on KOHO has zero effect on your credit utilization. For people whose credit score is suffering from high utilization, switching everyday spending to KOHO while paying down card balances is a smart strategy.