{"id":40520,"date":"2023-02-28T07:33:30","date_gmt":"2023-02-28T15:33:30","guid":{"rendered":"https:\/\/financer.com\/?post_type=wiki&p=40520"},"modified":"2024-05-03T11:46:58","modified_gmt":"2024-05-03T18:46:58","slug":"credit-utilization-rate","status":"publish","type":"wiki","link":"https:\/\/financer.com\/credit-cards\/articles\/credit-utilization-rate\/","title":{"rendered":"What Is a Credit Utilization Rate?"},"content":{"rendered":"\n
Credit utilization is an important concept that is often overlooked when it comes to credit health<\/a>.<\/p>\n\n\n\n It is a measure of how much new credit you are using, compared to the total amount of credit available to you.<\/p>\n\n\n\n In this wiki, we will explore what credit utilization is, why it is important, how to calculate your credit utilization percentage, and how to maintain a healthy credit utilization ratio.<\/p>\n\n\n\n Credit utilization is the ratio of your credit card balances to your credit limits. <\/p>\n\n\n\n It is expressed as a percentage and can be calculated by dividing your total credit card balances by your total credit card limits. <\/p>\n\n\n Example<\/strong>: If you have two credit cards with a combined limit of $10,000 and you owe $3,000 on one card and $2,000 on the other, your total revolving credit balances are $5,000, putting your credit utilization ratio at 50%.<\/p><\/div>\n\n\n A good credit<\/a> utilization ratio is typically considered to be 30% or less<\/strong>. Anything above 30% can have a negative impact on your credit score<\/a>. <\/p>\n\n\n\n For example, if your credit utilization ratio is 50%, it could be an indication that you are overextended and may have trouble making payments on time.<\/p>\n\n\n\n Credit utilization is an important factor in determining your credit score. In fact, it makes up 30% of your FICO score, which is one of the most commonly used credit scores<\/a> by lenders.<\/p><\/div>\n\n\n This means that a high credit utilization ratio can have a significant impact on your credit score, potentially making it more difficult to get approved for loans<\/a> or credit cards in the future.<\/p>\n\n\n\n In addition to affecting your credit score<\/a>, credit utilization can also impact how lenders view you as a borrower. <\/p>\n\n\n\n If you have a high credit utilization ratio, lenders may view you as a higher-risk borrower, which could result in higher interest rates<\/a> or fees.<\/p>\n\n\n\n There are several things you can do to maintain a healthy credit utilization ratio:<\/p>\n\n\n\nDefinition of Credit Utilization<\/h2>\n\n\n\n
Understanding Good and Bad Credit Utilization<\/h2>\n\n\n\n
Why Credit Utilization Matters<\/h2>\n\n\n
Tips to Maintain a Healthy Credit Utilization Ratio<\/h2>\n\n\n\n