I currently have a 75% credit utilization, which I know is not favorable on about 35,000 revolving credit. I am getting my year end bonus and plan on using that to completely pay off all of my credit cards leaving me with a 0% credit utilization. Currently my credit score is 668, mostly due to my utilization, I pay everything on time, but just have too much debt, which is why i'm paying it all off. My question is how much will paying off all my revolving credit and having a 0% utilization on 35,000 credit availability positively effect my credit score?

  • 8
    Maybe you should be targeting 100% utilization. The US government is always at 100% credit utilization (according to the debt ceiling) and it has a triple A credit rating.
    – Muro
    Jan 13, 2011 at 19:36
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    @Muro I don't think any government is a good model for the average person. Jan 13, 2011 at 21:44
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    @Muro it is a good model if you can take money from someone else by taxing him. For private persons it's called "robbery" though, so I wouldn't recommend it as a model - ROI on prison terms are usually low.
    – StasM
    Jan 13, 2011 at 22:50
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    Bad comparison, @Muro. The average person gets credit they might need, and then decide whether or not to spend it. Governments decide what they must spend, and then worry about getting credit for it. If the Gov were at 75% debt utilization, we would lower the debt ceiling and they would be back at 100%. Jan 14, 2011 at 16:47
  • 2
    congrats on a year-end "bonus" that can pay-off ~$25k in credit card debt!
    – warren
    Jun 21, 2012 at 15:18

2 Answers 2


I wrote an article about FICO scoring which shows that 30% of your score is based on utilization or amount owed. I can't say exactly how much your score will rise, or how long it will take, but your score will improve dramatically from what you propose.

Utilization Chart

This chart is from Credit Karma, and it shows how zero utilization is actually bad when it comes to your score. I wrote an article on my blog titled Too Little Debt in which I discuss further.
Under 20% is ideal, just not zero.

  • 1
    Pretty good article, too
    – Knox
    Jun 1, 2011 at 11:02
  • Nice answer, nice article, Joe. Upvote from me! Aug 13, 2016 at 20:24

You really don't know how credit scoring works.

Let's think about the purpose of a credit score: to assess whether you're a high default risk. A lender wants to know, in this order:

  1. Do you pay your debts? If so, do you pay late?
  2. How long your behavior be measured?
  3. Are you solvent?

Utilization factors into the solvency assessment. If you are at 100% utilization of your unsecured credit, you're insolvent -- you can't pay your bills. If you are at 0%, you're as solvent as you can be. Most people who use credit cards are somewhere in the middle.

When a bank underwrites a large loan like a mortgage or car loan, they use your credit score an application information like income and employment history to figure out what kind of loan you qualify for.

Credit cards are called "revolving" accounts for a reason -- you're supposed to use them to buy crap and pay your bill in full at the end of the month.

My advice to you:

  • Identify the person who told you that you need to carry credit card debt to have good credit and never, ever listen to them about business matters ever again.
  • Pay off all of your cards.
  • Use your credit cards as you see fit, as long as you can pay them off in 30 days without paying interest.
  • 6
    +1 but how about identify the person who told them to carry a balance and educated them back in kindness and spread the good word?
    – MrChrister
    Jan 14, 2011 at 2:23
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    "If you are at 100% utilization you are insolvent". Maybe I don't understand the terms but that seems wrong. If I am rich and have a very low credit limit, which I use all of, I'm not insolvent. Likewise if I use 50% of a large line of credit and then lost my job I may be insolvent. Jan 14, 2011 at 15:33
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    I never gave much thought to this, till a couple years back. I had cut back on cards, and used one every month with low limit. Paid in full every month, but utilization was still high. So I requested a line increase well above what I'd use. Problem fixed. Jan 14, 2011 at 19:15
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    @DJClayworth: Credit score models don't include your assets and aren't all-seeing and all-knowing. High credit scores lower default risk, but don't eliminate them. That's why smart banks underwrite loans for big loans like mortgages. Jan 15, 2011 at 1:24
  • Good point, DuffBeer. While the credit bureaus have quite a bit of data on you, they don't have everything, thus your report only represents a slice of the overall picture. It's enough to help creditors understand how you've used the credit you have thus far, but that's about it. Aug 13, 2016 at 20:26

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