credit utilization ratio

[kred-it yoot-l-i-zey-shuhn rey-shoh, rey-shee-oh]

Phonetic (Standard)IPA

noun

Finance.

the total amount of outstanding charges on a credit card compared to the card’s spending limit, expressed as a percentage calculated by dividing the balance due by the spending limit.
A high credit utilization ratio, especially above 50%, often indicates that a cardholder may be spending beyond their financial means.

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Word History and Origins

Origin of credit utilization ratio¹

First recorded in 1985–90

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Example Sentences

Examples have not been reviewed.

It’s possible you won’t get a high-enough ceiling to handle your project — and even if you do, adding a large new expense to a credit card could hike your credit utilization ratio, which also has consequences.

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Also, the balance transfer could alter your credit utilization ratio, which can negatively affect your credit score.

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“It should lower your overall credit utilization ratio because you have more credit, but also you’re paying down your balance more quickly,” Rossman said.

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The more credit you have available to you, the lower your credit utilization ratio is.

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The cost of the purchase may also drive up your credit utilization ratio, which could affect your credit score.

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credit union creditworthy

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