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What is credit utilization and why is it important?

Rounding it up

  • Credit utilization is a measure of how much revolving credit you’re using compared to the amount of revolving credit you have available with all of your credit cards

  • Most of the major credit reporting bureaus use your credit utilization ratio when calculating your credit score.

  • A credit utilization ratio below 30% is generally considered to be a good sign to lenders, so it can help you secure better loans and interest rates.

  • The best ways to improve your credit utilization ratio are by paying off any outstanding debt, limiting your spending on credit cards, and requesting credit line increases.

8 min read

Gaby Pilson
#Credit utilization#credit card#debt

Gaby Pilson

Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.

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