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 ApartRELATED TERMS
SOURCES
- Credit reports and scores. Consumer Financial Protection Bureau.