Improve Your Credit Score with Credit Utilisation

Updated: Sep 3

Negociate Credit Solutions - Author Lauren Heekes

Pay Special Attention to Credit Utilisation


Credit utilisation makes up 30% of your credit score and is often the most overlooked method of improving your score. Understanding how it works — and how to make it work for you — is one of the easiest ways to improve your score.



Credit utilisation is the percentage of available credit used during a billing cycle. In mathematical terms, it is calculated this way: amount owed divided by the card’s credit limit.


The optimal use is less than 30% of available credit.


Credit Utilisation and how to make it work for you

For example, if you have one card with a R10,000 credit limit, and you spend R3,000 on it in a month, your credit utilisation is exactly where it should be (3,000 divided by 10,000 = 0.30 or 30%). Any spending under 30% credit utilisation is considered a good thing.


The damage to your score starts when your utilisation rate goes over 30%. If you spend R5,000 a month on the same card, your credit utilisation soars to 50%. That is an indication to credit agencies that you are taking on more debt than you can afford, thus your credit score drops.


Credit Utilisation should not exceed 30% of your Credit Limit

If that happens, there are two solutions: cut your spending or consider applying for a second credit card.


Cutting spending is the most sensible choice, but circumstances might not allow for that. If you change or lose a job, move to a new city, incur unforeseen medical expenses or any number of other reasons, it may cause your bills to increase and credit utilisation to go up with them.


If that happens, you can consider a second credit card to help improve your credit score.


A second card with a R10,000 credit limit increases the amount of credit you can utilise between the cards by R2,000 a month. If you split the R5,000 you spend each month between the two cards, your credit utilisation drops below 25% for each of them.


In this scenario, your problem is solved, but only if you are disciplined about tracking card use. That means keeping constant tabs on how much is spent on each card, setting up alerts to check spending totals and even paying down the bills in the middle of the month so you’re sure to stay under 30% usage.


If you do all of that, you can petition the card companies to raise your credit limit to R25,000 and make it easier to stay under 30% utilisation. You might even be able to go back to using just one card.


Adding credit cards to your wallet is normally frowned upon, but if you’re having problems with credit utilisation, it’s worth looking into.

Lauren is a registered member of the National Credit Regulator. Prior to that, she worked as a Financial and Technical consultant for McGregor-BFA (Now INET-BFA). McGregor-BFA provided Trading and Market related data as well as Investment management software to Asset Managers, University Business Schools and Investment entities. Thereafter experience was advanced to the Property Market working as a Project Manager for Propertyi. But it was her career at the IEB in Adult Education that inspired a passion of hers to educate consumers about responsible ways of managing their financial lives and the long term advantages of doing so. It is her belief that financial education should be taught from an early age. By doing so we can create a country that is truly economically stable, driven not only by work ethics, but by becoming Financially Independent too.


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