What is Credit Utilisation?

Learn the key facts about credit utilisation - what it is, how it works, why it’s important for your credit score and how Aqua can help.

Written by Hayley Bevan and Victoria Smith

Published on June 4th, 2026

Last reviewed on June 4th, 2026

8 mins read

Understanding credit cards

Credit utilisation is how much credit you’re using out of the total amount you’ve been offered, normally shown as a percentage.

You might reasonably think if you’ve been offered credit, you should use all of it, but this is not the case. It’s generally agreed that a good credit utilisation percentage is around 30% or less of your total credit utilisation range. So, if you have a credit limit of £1000, it’s best to maintain a credit card balance of £300 or less.

Protecting a healthy credit utilisation is important. Keeping your credit utilisation healthy shows lenders that you manage your credit card balance well, which could help improve your credit score over time.

This guide explains what credit utilisation is, why it matters, what a healthy range looks like and how you can manage it. We’ll also cover how credit limits and balances work together and how Aqua could help you build credit with a credit card.

Why is credit utilisation important?

Credit utilisation is important because it can play a big role in your credit score. Your credit score is a number that shows lenders how you manage borrowing. Staying within your credit limit and having a healthy score can help make it easier to be approved for credit and other forms of borrowing, like loans or mortgages.

When your credit utilisation is low, it shows that you’re responsible and lower risk to lenders. It suggests that you’re not relying too heavily on credit and that you borrow within your limits. This can also help build your credit score.

The lower that percentage is, the healthier it generally looks. However, having a high credit utilisation could show lenders that you’re having trouble managing your money and are a higher risk for credit. It could also mean having higher interest rates, getting approved for lower amounts and even rejected applications.

That’s why understanding how your spending relates to your credit limit matters, even if you always make your credit card payments on time.

What is a healthy credit utilisation range?

A credit utilisation range is the percentage amount that you should aim to keep your usage within. It fits into a group of low, medium or high depending on your percentage. For example, using 10% of your limit fits into a low range. It shows lenders if your borrowing is manageable.

For most people, what’s considered a healthy range varies based on your financial circumstances. But, as a general rule, credit utilisations sitting between 10% to 30% are typically considered good.

Healthy ranges can vary depending on your situation. If you want to show extra financial responsibility, it can help to aim even lower if possible. For example, keeping utilisation below 10% may be a good idea if you’re trying to rebuild your credit score or applying for a mortgage or loan. These are some typical ranges:

0-10% is excellent (credit score likely to improve and loans likely to be approved at ideal rates)
10-30% is good (score likely to stay same, but credit history helps build your status)
30-50% is fair (could be viewed as a risk over a longer period, leading to higher interest rates)
50-75% is poor (credit score could reduce, with loans less likely to be approved or have higher interest rates)
75%+ is very poor (credit score likely to be lowered with loan applications likely to be rejected)

Credit utilisation is considered the second biggest factor influencing credit scores. If your current utilisation is 30% or more, it could be why your credit score has gone down.

How do credit limits and balances affect your credit score?

Credit scores can go up or down depending on how you manage your credit limit and balance. Your credit limit is the maximum amount you can spend, and your balance is what you’ve actually spent and not yet paid back.

The key factor is the relationship between the two. Spending on your credit card reduces your available credit and paying it back adds it again.

When your balance stays low compared to your limit, your credit utilisation stays low. Even if you make all your repayments on time, a high balance compared to your limit can still affect your score. That’s why both spending and repayments matter.

Whatever your credit limit, it’s important to keep utilisation low by making repayments on time and only borrowing what you can comfortably afford to repay each month.

Can a low-limit credit card improve your credit score?

A low-limit card is a credit card with a smaller spending limit, usually between £200 to £1500. They’re often designed for people who are new to credit or looking to rebuild their credit score.

Even with a low-limit card, you should still maintain a utilisation of 30% or less. By spending smaller amounts and clearing your balance on time, your credit report will show low credit utilisation while building your credit history. This keeps your credit utilisation low while still showing activity.

Using a small amount and paying it back on time usually looks better on your credit history than not using a card at all. Having a card and never using it doesn’t show how you handle credit to lenders. It’s important to make sure that you stay up to date with your payments and make them on time. Over time, this can help build good activity on your credit history. Discover more ways to build your credit score

Will using an Aqua credit card help me to build credit?

An Aqua credit card can help you build credit. It’s designed for individuals with a limited or poor credit score and comes with a range of free features to help you get back on track financially.

As well as clearly defined credit limits to keep your spending in check, an Aqua credit card also comes with 24/7 guidance and support available through Aqua Coach and your Online Account Manager.

As standard, you’ll also get payment reminders. Not only to reduce the likelihood of late payment fees, but to help you maintain a healthy credit utilisation by consistently paying down your balance on time.

Provided your Aqua credit card is consistently used sensibly, you can slowly begin to build your credit score and potentially open doors to other financial products in the future, such as a loan or mortgage.

FAQs

How is credit utilisation calculated?

Credit utilisation is calculated by dividing your balance by your credit limit, then multiplying by 100 to turn it into a percentage. This is also known as your ‘credit utilisation ratio’.

Does using a credit card too often reduce your credit score?

Using a credit card too often will only reduce your score if it results in a high credit utilisation (above 30%) or missing repayments. Provided your balance is cleared every month, regularly using a credit card can build your score.

Is it beneficial to use multiple credit cards?

Having multiple credit cards could potentially improve your score and help maintain a low credit utilisation. It’s an option that requires sensible financial management to avoid overspending and missing payments.

What will happen if I have over 50% credit utilisation?

Having a high credit utilisation of 50% or more can reduce your credit score and signal to lenders you’re overly reliant on credit. It can also hinder your chances of being approved for other financial products, such as a mortgage.

Will my credit score improve if I own a credit card but choose not to use it?

Owning but not actively using a credit card will not improve your credit score. If your credit card stays inactive for a significant amount of time, your lender may decide to close your account.

What other factors affect my credit score?

As well as credit utilisation, other factors that could affect your credit score include missing payments, borrowing beyond your means, applying for cards too often and having little or no credit history.

Credit utilisation is the total amount of credit you’re using, calculated by dividing your total credit balances by total available credit. By maintaining a credit utilisation of 30% or below, you’re more likely to protect and potentially improve your credit score.

Steps to keeping a low credit utilisation can include setting a spending budget, making repayments on time, and only borrowing what you can comfortably afford to repay each month. Provided you don’t overspend, you could also request a credit limit increase on your credit card. If you want to improve your credit score, find out if you’re eligible for an Aqua credit card. Along with personalised credit limits, you’ll get ongoing support from.

Aqua Coach – our free credit-building tool designed to help you get better at credit management.

Want to improve your credit score? Find out if you’re eligible for an Aqua credit card today to start building healthy borrowing habits and strengthen your credit profile!

Representative 39.9% APR (variable) on Aqua Classic

Failure to make payments on time or to stay within your credit limit means that you will pay additional charges and may make obtaining credit in the future more expensive and difficult.

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