Credit utilization — how much of your available credit you're using — is the second most important factor in your Canadian credit score after payment history, accounting for approximately 30% of your score. The commonly cited "keep utilization under 30%" is outdated. Current evidence suggests keeping utilization under 10% produces significantly better scores. This guide explains the math, the myths, and the multi-card strategy that maximizes your score.
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What is Credit Utilization?
Credit utilization = (total credit card balances reported) ÷ (total credit card limits). If you have $100 in total limits and report $3,000 in balances, your utilization is 30%. In Canada, both Equifax and TransUnion consider utilization at both the individual card level and the aggregate (all cards combined).
The 30% Myth — Why Under 10% is Better
The "30% rule" is a floor, not a ceiling. Credit scoring models reward lower utilization — particularly under 10% — with the highest scores. Here's the typical utilization band impact:
| Utilization Range | Score Impact | Recommendation |
|---|---|---|
| 0% (no activity) | Neutral to slightly negative | Make one small purchase per month |
| 1–9% | Best possible for utilization factor | Optimal target |
| 10–29% | Good | Acceptable |
| 30–49% | Moderate negative impact | Improve if possible |
| 50%+ | Significant negative impact | Priority to reduce |
| 90%+ | Severe negative impact | Urgent reduction needed |
When Utilization is Reported
A critical misconception: utilization is calculated based on the balance reported to the credit bureau — typically your statement balance on the statement closing date, not your actual purchases throughout the month. If your card closes on the 15th with a $2,000 balance, that $2,000 is reported regardless of whether you pay it in full by the 25th due date.
Strategy: if you want to lower reported utilization, pay down your balance before your statement closing date — not just before your payment due date.
Multiple Card Strategy for Better Utilization
Spreading spending across multiple cards with higher combined limits can dramatically lower utilization:
- One card with $5,000 limit, $2,000 spending = 40% utilization
- Two cards with $5,000 limits each, $1,000 per card = 20% utilization on each card; 20% aggregate
- Three cards with $5,000 limits each, $667 per card = 13% on each; 13% aggregate
This is one reason the rewards community's "hold multiple cards" strategy has a secondary benefit beyond just earning different reward rates — it structurally improves utilization.
Credit Limit Increases — Request Them
Requesting credit limit increases on existing cards is a straightforward way to reduce utilization without spending less. Equifax and TransUnion both see a hard inquiry when banks do full credit checks for increases, but many banks offer "soft pull" limit increases through their apps. Check your bank's app — TD, CIBC, Scotiabank, and RBC all offer online limit increase requests that may use only a soft pull.
Authorized User Accounts
Being added as an authorized user on someone else's account with a high limit and low utilization can improve your own score — their utilization history is reported on your credit file (at some bureaus). However, if the primary cardholder has high utilization or misses payments, it also negatively impacts your score.
Utilization Optimization Strategy
- Target under 10% reported utilization for the best scores
- Pay balances before statement closing date (not just due date) to lower reported balance
- Request credit limit increases on existing cards via app (may use soft pull)
- Spread spending across multiple cards to lower per-card utilization
- Never use a KOHO or prepaid card for purchases you want to count toward credit building