Credit utilization is the ratio between the balance on a card and its credit limit, expressed as a percentage.
Credit utilization is the ratio between the balance on a card and its credit limit, expressed as a percentage.
Also called: Utilisation ratio.
How it works#
In scoring systems that use this measure, what usually counts is the balance on the statement date, not the monthly average. A high ratio can depress a score even when the bill is paid in full afterwards. Paying before the statement date or holding a higher limit lowers it immediately, and how much weight it carries differs sharply between countries and bureaus.
Not to be confused with#
Credit utilization is not the same as a missed payment: a high ratio only shows heavy use of a credit line, not any delinquency.
In German#
The German term is Kreditausnutzung. German version of this term
Related terms#
- Credit limit: A credit limit is the maximum balance a card account may carry between statements.
- Credit score: A credit score is a number a bureau uses to express how likely a person is to meet their payment obligations.
- Carrying a balance: Carrying a balance means leaving part of a card bill unpaid so that it rolls into the next month and accrues interest.
Articles that use this term#
TopicEvery article and term onCards and money.