GLOSSARY · DEBT & HOUSING

Credit utilization

The share of your available revolving credit, mostly credit card limits, that you are using, measured from the balances on your statements. Credit scoring models treat a lower share as a sign of lower risk, so paying balances down before the statement date can raise a score quickly, while closing an unused card can raise utilization.

Also called: utilization ratio, credit card utilization
FORMULA
Utilization = total card balances ÷ total card limits
LEARN IT PROPERLY
CHAPTER · ARRIVING AND WORKING ON A VISA · FOUNDATIONSBank Accounts, an SSN or ITIN, and Credit from ZeroCHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSTypes of Debt and What Sets Them Apart
RELATED TERMS
Debt validation noticeCredit score
SOURCES
All terms →The Library →