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Does Credit Utilization Reset After Payments are Made?

Updated: May 3, 2023


A credit score board logo and a credit card.

Credit utilization is the percentage of your available credit that you're using at any given time. It's one of the most important factors that lenders use to determine your creditworthiness. Many people wonder whether credit utilization resets after payment or if it's a rolling average.


First, let's take a closer look at how credit utilization is calculated. To calculate your credit utilization, you divide your credit card balance by your credit limit. For example, if you have a credit card with a $5,000 credit limit and a $1,000 balance, your credit utilization is 20% ($1,000 divided by $5,000).


Now, to answer the question at hand: Does credit utilization reset after payment? The answer is that it depends on when the credit card issuer reports to the credit bureaus. Credit card issuers typically report your balance and credit limit to the credit bureaus once a month, usually on your statement closing date. This means that if you pay off your credit card balance before the statement closing date, your credit utilization will be reported as zero to the credit bureaus.


However, if you carry a balance on your credit card past the statement closing date, your credit utilization will be reported to the credit bureaus, even if you pay off the balance in full before the due date. This is because the credit card issuer reports your balance as of the statement closing date, not the due date.


It's important to note that even if your credit utilization doesn't reset after payment, it can still fluctuate from month to month based on your spending habits and credit limits. To keep your credit utilization low, aim to use no more than 30% of your available credit at any given time.


Credit utilization does not reset after payment, but it can fluctuate based on when the credit card issuer reports to the credit bureaus. To keep your credit utilization low, aim to use no more than 30% of your available credit and pay off your balance in full each month if possible. By managing your credit utilization responsibly, you can improve your credit score and increase your chances of being approved for credit in the future.




Disclosure: For Change Financial only recommends products we would use ourselves. All opinions expressed here are our own. This page may contain affiliate links and we may earn a small commission, at no extra cost to you. Read our full privacy policy on our website.


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