credit utilisation
Credit Utilisation is how much of your available credit limit you are actually using, shown as a percentage, and lenders watch it closely.
In plain English
Almost everyone with a credit card has done this: you get a limit of ₦500,000, and somehow it feels like free money sitting there, so you spend close to all of it because you can, and you always plan to pay it back before the due date anyway.
But here is what nobody explains at the bank when they hand you the card. The percentage of that limit you are using at any given time, called your credit utilisation, is one of the loudest signals lenders use to judge whether you manage money well, even if you pay every bill on time.
Say your limit is ₦500,000 and your balance sits at ₦450,000 most months. That is 90 percent utilisation, and to a lender that looks like someone leaning heavily on borrowed money, even if you are current on payments. Keep that balance closer to ₦100,000 or less, and it tells a calmer story, that you use credit without depending on it.
This matters for a Nigerian professional trying to build a strong credit profile before applying for a car loan, and it matters just as much for someone in London on a UK credit card who wants a good score before a mortgage application. The lenders on both sides of that story are reading the same signal.
The frustrating part is that utilisation resets and gets reported often, sometimes monthly, so a single expensive month, a hospital bill or a wedding contribution, can spike your percentage right before you need your credit to look its best.
The fix is not complicated, it is just calmly disciplined. Pay down balances before the statement closes, spread spending across cards if you have more than one, or ask for a limit increase you do not intend to use, since a bigger limit against the same balance lowers your percentage automatically.
Adaeze has a credit card limit of ₦300,000. She usually carries a balance of ₦240,000, which is 80 percent utilisation. Her bank reads this as heavy reliance on credit, even though she pays her minimum every month. She pays it down to ₦60,000, bringing her utilisation to 20 percent, and within two months her credit score moves noticeably higher.
Questions people ask
What is a good credit utilisation percentage?
Most lenders like to see it below 30 percent, and under 10 percent is even better if you are about to apply for a major loan.
Does paying my balance in full every month still affect utilisation?
It can, because many lenders report the balance on your statement date, not after you pay, so a high spend month can still show as high utilisation even if you clear it days later.
Does closing an unused credit card help or hurt my utilisation?
It usually hurts, because closing a card reduces your total available limit, which raises your utilisation percentage on the balances you still carry elsewhere.
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