Sample content — final article coming soon.
Credit utilization is the share of your available revolving credit that you are using, usually shown as a percentage: your balance divided by your credit limit.
How utilization is calculated
If a card has a $1,000 limit and a $250 balance, the utilization on that card is 25%. Many scoring models also look at overall utilization across all of your cards.
Why utilization matters
Amounts owed, including utilization, are one of the factors many scoring models consider. It is only one factor among many, and models weigh it differently.
Because issuers often report your statement balance, the ratio that appears on your report can depend on when you make payments.
Responsible card habits
- Know each card’s limit and statement date
- Keep balances at a level you can repay comfortably
- Pay at least the minimum on time, every time
- Review statements for charges you do not recognize
Sources
- AnnualCreditReport.com: official source for free credit reports
- Consumer Financial Protection Bureau: credit reports, scores and consumer rights
- Federal Trade Commission: free credit reports and disputing errors
This article is general educational information, not individualized legal, tax or financial advice.
