Archive for May 17, 2010

Credit Utilization – What is it?

Credit utilization is simply your total balances divided by total credit limits: 

Revolving Debt Balances / Credit Limits = credit utilization 

This calculation is how creditors determine your revolving credit utilization. The credit utilization percentage tells them how much of your available credit you are currently using. You want this number to as low as it can be. 

Why is this important? 

Approximately 30% of your FICO credit score is based on amount of debt. The higher your credit utilization percentage, the lower your score will be. 

What you can do: