Definition of «credit utilization»

Credit utilization refers to how much credit a person or business is using in comparison to their available credit limits. It is an important factor that lenders and creditors consider when evaluating someone's creditworthiness, as it indicates how responsible they are with managing their debt. A high credit utilization ratio can indicate that the individual is maxing out their credit cards or taking on too much debt, which may suggest a higher risk for the lender. On the other hand, a low credit utilization ratio shows that the person is using only a small portion of their available credit and is managing their debt responsibly.

Sentences with «credit utilization»

  • A low credit utilization ratio improves your credit score. (goldenfs.org)
  • This will all result in lower credit utilization ratios — and higher credit scores. (wisebread.com)
  • Always paying bills by the due date, keeping credit utilization rates low, and avoiding opening unnecessary credit accounts are all good ways to maintain a «good» or better credit rating. (badcredit.org)
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