Credit Utilisation Ratio Australia — How It Affects Your Score

Quick Answer: Credit utilisation ratio is the percentage of your available credit limit you are currently using. For example, a $3,000 balance on a $10,000 credit card limit = 30% utilisation. In Australia, most scoring models treat utilisation above 30% as a negative signal, with utilisation above 60% causing significant score damage. Since Comprehensive Credit Reporting (CCR) was introduced, your credit limits are now visible to all lenders — meaning high utilisation affects both your score and how lenders assess your ability to repay new debt. The fastest way to improve utilisation is to pay down balances, request higher limits, or close surplus cards strategically. If negative credit file entries (defaults, excess enquiries) are also suppressing your score, Australian Credit Solutions can assess them for removal under the Privacy Act 1988. 98% success rate. No Win No Fee. ASIC ACL 532003. Industry Excellence Award 2022, 2023 & 2024. 4.9/5 from 976+ reviews. Over 5,000 Australians helped since 2014.

Of all the factors that affect your credit score in Australia, credit utilisation is one of the most misunderstood — and one of the fastest to fix.

What Is Credit Utilisation Ratio?

Credit utilisation ratio measures how much of your available revolving credit (mainly credit cards) you're currently using. It's calculated as:

Credit Utilisation = (Total Balances ÷ Total Credit Limits) × 100

Example:

• Credit Card A: $2,500 balance / $5,000 limit
• Credit Card B: $500 balance / $3,000 limit
• Total balance: $3,000 / Total limit: $8,000
• Utilisation: 37.5%

This applies to revolving credit products — primarily credit cards and lines of credit. Instalment loans (home loans, car loans, personal loans) are assessed differently and are not part of the utilisation calculation.

Why CCR Made Utilisation More Important Than Ever

Before Comprehensive Credit Reporting was introduced in 2018, credit bureaus only saw your balances and defaults — not your limits. Post-CCR, your credit limits are now shared with bureaus and visible to every lender who accesses your file.

This is significant for two reasons:

1. Scoring impact: High utilisation signals financial stress to the scoring algorithm — you're using a large proportion of what you've been approved for, which statistically correlates with higher default risk.

2. Serviceability impact: When you apply for new credit (home loan, car loan), lenders now calculate a monthly liability based on your total credit card limits — typically 3% of the total limit, regardless of actual balance. A $20,000 combined credit card limit = $600/month in assumed liability in lender calculations. This reduces how much you can borrow.

The Utilisation Score Impact Bands

Credit bureaus don't publish exact utilisation weighting formulas, but industry data and bureau guidance consistently show: For more, see our guide on how your credit score is calculated in australia.

The 30% rule: Keeping total credit utilisation below 30% is the standard guidance. This doesn't mean 30% is optimal — 10–20% typically produces better results. Zero is not ideal either (some utilisation shows you can manage credit).

How Utilisation Affects a Home Loan Application

This is the scenario where utilisation matters most. Two impacts combine: For more, see our guide on does closing a credit card affect your credit score.

Score impact: High utilisation reduces your Equifax/Experian score, potentially moving you from standard lending (competitive rates) to specialist lending (higher rates).

Serviceability impact: The lender's serviceability calculation includes a monthly liability for your total credit card limits. Two credit cards totalling $25,000 in limits = $750/month assumed liability — even if both cards have zero balance on application day.

What lenders recommend: Many mortgage brokers advise reducing credit card limits (not just balances) in the 3–6 months before a home loan application. A $15,000 limit reduced to $3,000 saves $360/month in assumed liability — which can mean tens of thousands of dollars more in borrowing capacity.

Case Study: Brianna, Brisbane — From 78% Utilisation to 22% in 90 Days

Brianna, 32, a marketing coordinator from Woolloongabba, had a credit score of 549. She had three credit cards: limits of $6,000, $4,000, and $3,000. Total limit: $13,000. Combined balance: $10,100. Utilisation: 78%.

She hadn't done anything "wrong" — no defaults, no missed payments. She'd just gradually carried balances across three cards for 2 years while paying minimum repayments. The CCR system was accurately recording her limits and balances each month, and the high utilisation ratio was suppressing her score by approximately 90–110 points from where it would sit with clean balances.

Brianna's plan (implemented over 90 days): aggressively paid down the smallest card to zero (closed it — reducing limits and complexity simultaneously), paid the $4,000 card down to $600, and maintained minimum repayments on the $6,000 card while transferring discretionary spending to debit. New utilisation: $3,200 / $10,000 = 32% — then further improved to $1,800 / $10,000 = 18% after 3 more months.

Score improved from 549 to 648 over 6 months — without a single default dispute or enquiry removal. Pure utilisation management.

Australian Credit Solutions also reviewed her file and confirmed there were no additional removable entries — meaning the utilisation reduction was the single intervention needed in her case.

If you have defaults or enquiries on top of high utilisation, removal of those entries can produce much faster results.

Get a free assessment from Australian Credit Solutions →

How to Reduce Your Credit Utilisation Ratio

Strategy 1: Pay Down Balances (Fastest Impact)

The most direct approach. Every dollar paid down reduces your utilisation ratio immediately. Focus on the card closest to its limit first (highest utilisation card), not necessarily the highest interest rate card — for score improvement purposes, the utilisation percentage matters more than the interest rate.

Strategy 2: Request a Credit Limit Increase

If you can't pay down balances quickly, increasing your limit reduces your utilisation ratio without reducing the balance. A $5,000 balance on a $10,000 limit (50%) becomes $5,000 on a $15,000 limit (33%) with a successful limit increase.

Warning: Limit increase requests create a hard credit enquiry on your file, temporarily reducing your score. The utilisation improvement may take a month or two to fully offset the enquiry impact. Don't request limit increases in the 6 months before a major credit application.

Strategy 3: Reduce Limits on Cards You Don't Need

Counterintuitively, reducing limits on high-limit cards you rarely use can help you avoid the serviceability problem with lenders — but doesn't directly reduce your utilisation ratio (it may increase it if you carry balances on remaining cards).

Strategy 4: Spread Balances Across Cards

If you have two cards — one maxed, one empty — your average utilisation may be lower than it appears. Moving balances so no single card is at or near its limit can improve the per-card utilisation signal, which some scoring models weight separately from overall utilisation.

Common Utilisation Mistakes

Mistake 1: Paying the minimum and thinking the utilisation problem is resolved. Minimum repayments on credit cards rarely reduce the principal balance materially. On a $8,000 balance at 20% interest, a $200 minimum repayment barely covers the interest. The balance — and the utilisation — barely moves.

Mistake 2: Closing cards to reduce temptation. Closing a card with a $5,000 limit and zero balance instantly increases your utilisation ratio (less available credit against the same balance on remaining cards). The score impact can be significant, especially if it's your oldest card.

Mistake 3: Applying for a new card to get more available credit. A new card application creates a hard enquiry that temporarily reduces your score — potentially by more than the utilisation improvement gains. Wait until the inquiry impact diminishes before applying for new products.

Mistake 4: Not checking what the bureaus see. Pull your credit reports from equifax.com.au, experian.com.au, and creditreport.com.au. Confirm the credit limits recorded are accurate. Bureaus sometimes record outdated or incorrect limit information that artificially elevates your visible utilisation ratio.

Frequently Asked Questions

What is a good credit utilisation ratio in Australia? The optimal credit utilisation ratio in Australia is generally considered to be below 30%, with 10–20% producing the best scoring outcomes. Zero utilisation (unused credit) is slightly less optimal than low utilisation — some activity demonstrates you can manage credit responsibly. Above 30% begins to create negative scoring signals, with significant score damage above 60–70%.

Does credit utilisation affect credit score in Australia? Yes — significantly. Credit utilisation is one of the major factors in Australian credit score calculations. Under Comprehensive Credit Reporting (CCR), your credit limits are now reported to bureaus monthly, making utilisation data more accurate and up-to-date than ever. High utilisation (above 60%) can suppress an Equifax score by 70–150+ points.

How do I check my credit utilisation rate in Australia? Pull your credit reports from Equifax, Experian, and Illion (all free at least once every 3 months). The reports show your credit card limits and current balances. Divide total balance by total credit limit and multiply by 100 to get your utilisation percentage. Some free score tools like Finder and CreditSavvy also display this information.

Does paying off a credit card improve credit score immediately? Paying a credit card balance down reduces your utilisation ratio, which typically reflects in your credit score within 1–2 months (the time it takes for the lender to report the new balance to the bureau and the bureau to update your score). The improvement is usually visible within 30–60 days of a significant balance reduction.

Does credit card limit affect credit score Australia? Yes — in two ways. First, higher credit limits with low balances mean lower utilisation ratios, which is positive for your score. Second, very high total credit limits increase the assumed monthly liability lenders calculate for serviceability purposes, which can reduce your borrowing capacity for home loans and other credit. Reducing limits before major loan applications is common advice from mortgage brokers.

Does utilisation reset each month in Australia? Credit card balances reported to bureaus reflect the balance at the point the lender submits data — typically once per month. If you pay your balance to zero before the statement date, the balance reported may be zero even if you used the card extensively during the month. Understanding your statement cycle can help you optimise the utilisation figure that gets reported.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Does closing a credit card affect your score? → | How is credit score calculated? → | Credit strategies to improve in 30 days →