Credit Utilization Rate

What does it mean

Within a Credit Report, the Credit Utilization rate signifies the percentage of your available credit that has been utilized. For instance, if you have a credit card with a $10,000 limit and an outstanding balance of $8,000, your credit utilization rate would be 80%. A lower credit utilization rate is perceived more favorably, indicating accessible credit and adept financial management without accumulating excessive debt.

 

Why does it matter

Understanding the factors that influence a person's credit score is crucial, as this score has a widespread impact on various aspects of life. Sharing this knowledge with your customers can set you apart from your competitors.

 

Other Relevant Terms

Want to Master Banking's Favorite Ratio?

The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!

Get the Cheatsheet Now

Not Finding What You Are Looking For?

Let me know what terms, ratios or content you want to see covered.

Request Term or Ratio

Am I missing a key term or ratio? Let me know what you want to see covered.

Request Term/Ratio

Request Content

Do you have a topic idea you'd like to see covered?  Send it my way.

Request Content

Checkout Courses

Enhance your skills through a deeper understanding of your customers' businesses.

See Courses

A bit about me

Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities.  Win-win-win.