credit utilization

Credit utilization is the percentage of your available credit that you’re currently using. For example, if your credit limit is $1,000 and you owe $200, your utilization rate is 20%. Keeping this rate low, generally below 30%, shows lenders you're responsible with credit and can help improve your credit score. Higher utilization suggests you rely heavily on credit, which can signal financial strain and may negatively impact your creditworthiness. Managing your utilization involves regularly monitoring your credit balances and avoiding maxing out your credit lines.