◈ GLOSSARY · PERSONAL FINANCE
Credit Utilization.
A definition, in plain English — with the books that teach it.
ClearValue Books · reviewed against sources ·
◈ DEFINITION
What it means
Definition
The percentage of your available revolving credit you're actually using — total card balances divided by total card limits. It's the second-biggest FICO input after payment history, and the score rewards keeping the reported number under 30%, ideally under 10%. The catch: the number reported is whatever's on your statement date, not after you pay it off, so paying before the statement closes can boost the score.
◈ IN PRACTICE
Example
Three cards with limits totaling $30,000 and statement balances totaling $2,400 = 8% utilization, which is in the optimal band for FICO.
◈ RECOMMENDED READING
