Credit Utilization Ratio measures how heavily you are relying on revolving credit lines relative to your approved credit limits. It is the second most influential factor in your FICO Score calculation, accounting for 30% of your overall score.
Credit scoring models evaluate both: - Individual Utilization: Balance divided by credit limit on each individual card. - Aggregate Utilization: Total combined balance across all cards divided by total combined credit limits.
Maintaining a low utilization ratio signals to underwriting algorithms that you manage credit prudently without relying on credit to fund daily living expenses.