Credit utilization is the ratio of your balances to your credit limits.
Why It Matters
High utilization signals risk to lenders and lowers your score.
How to Calculate
Balance ÷ Credit Limit × 100 = Utilization %
Example: $500 balance ÷ $2,000 limit × 100 = 25%
Tips to Lower Utilization
- Make multiple payments per month
- Increase credit limits responsibly
- Keep old accounts open
FAQ:
Does paying in full help? Yes, it keeps utilization low and benefits your score.