Credit Utilization Truth: VA IRRRL Expert Guide [Jan 2026]

Credit Utilization Impact: The 10% vs 30% Truth

January 2026

Credit utilization remains one of the most misunderstood factors affecting veterans' credit scores. After years in VA lending and helping thousands of veterans secure IRRRLs, I've noticed a persistent misconception about the "ideal" utilization rate. Let me clear this up once and for all.

The Common Misconception

Veterans often ask me: "I heard keeping credit utilization under 30% is the magic number. Is that true?"

What most veterans don't realize is that the 30% guideline is outdated advice that continues to circulate despite evidence to the contrary. In my experience with VA lending, I've consistently seen that lower utilization rates correlate with higher credit scores - there's no magical threshold at 30%.

The Reality of Credit Utilization

Here's the insider knowledge I share with my clients: FICO scoring models actually view credit utilization as a sliding scale. Every percentage point matters. A 29% utilization isn't significantly better than 31%, but a 10% utilization will almost always outperform a 30% utilization in terms of your score impact.

The key concept to understand is that credit scoring models see lower utilization as lower risk. Period. This means a 1% utilization rate is theoretically ideal, though maintaining 10% or less is generally excellent.

Why This Matters for Veterans

For veterans considering an IRRRL, understanding true credit utilization impact is crucial. Even a 15-20 point credit score improvement can potentially qualify you for meaningful rate improvements. I created EZ-IRRRL because I saw veterans missing out on savings due to these types of credit misconceptions.

Practical Application for Veterans

If you're planning to refinance with an IRRRL in the coming months:

1. Try to pay down revolving accounts to below 10% utilization 2. Don't close unused credit cards (this reduces available credit) 3. Time large purchases carefully to avoid temporary utilization spikes 4. Check your credit report for errors that might be affecting utilization calculations

Through our automated IRRRL system, we've eliminated origination costs that traditional lenders charge, but your credit score still impacts your rate. That's why understanding these nuances matters.

Veterans who maintain utilization under 10% consistently report better outcomes than those hovering around the mythical 30% mark. This approach, combined with our no-income-verification, no-appraisal process, helps maximize your potential savings.

Remember, with an IRRRL, the VA doesn't require debt-to-income verification, but your credit profile still matters significantly for rate determination.

This is not an offer to lend. Rates subject to change. Get an official Loan Estimate before choosing a loan. EZ-IRRRL is not affiliated with the U.S. Government.