Credit Utilization
Credit utilization is the percentage of your available credit you are currently using. If your credit limit is $1,000 and your balance is $300, your credit utilization ratio is 30%. This number plays a big role in your credit profile. Credit bureaus use this ratio as one of the key factors when scoring your credit.
How Is Credit Utilization Calculated?
The calculation is simple:
- Divide your current balance by your credit limit
- Multiply the result by 100 to get a percentage
Example: A $400 balance on a $2,000 limit equals 20% utilization.
If you have more than one credit account, the total is calculated across all of them. Each account is also reviewed individually.
What Is a Good Credit Utilization Ratio?
Aim to keep your credit utilization ratio below 30%. Lower is better. A ratio above 50% signals to lenders that you rely heavily on credit, which lowers your score.
A 0% ratio is not always ideal. Some credit activity shows lenders you are using credit well over time.
Why Does Credit Utilization Affect Your Credit Score?
Your credit utilization ratio is a large part of your credit score in Canada. Using most of your credit signals financial pressure to lenders. Keeping balances low shows responsible use.
Paying down balances each month is one of the best ways to protect and grow your score over time.
Tips to Keep Your Credit Utilization Low
Here are some practical ways to manage your ratio:
- Pay off your balance before your statement closing date, not just the due date
- Ask your lender about a credit limit increase if you have a strong payment history
- Spread purchases across multiple cards rather than maxing out one
- Avoid closing old accounts. Doing so reduces your total available credit
Credit Utilization and Short-Term Borrowing
A payday loan from Speedy Cash does not affect your credit utilization ratio. A payday loan is not a revolving line of credit. It does not have a credit limit to draw from the way a credit card does.
If you need short-term funds and want to avoid adding to your credit card balance, a Speedy Cash payday loan is worth exploring. Eligibility and amounts vary by province.
Summary
Credit utilization is the percentage of your available credit currently in use. Keeping the ratio below 30% helps protect your credit score. Paying off balances and avoiding maxed-out limits are among the best ways to stay on track. Speedy Cash does not check your credit score as part of the payday loan application process.
Ready to explore your short-term borrowing options? Apply online or find a Speedy Cash store near you.