credit utilization ratio

American  

[kred-it yoot-l-i-zey-shuhn rey-shoh, rey-shee-oh] / ˈkrɛd ɪt yut lˌɪˈzeɪ ʃən ˌreɪ ʃoʊ, ˌreɪ ʃi oʊ /

noun

Finance.

1. 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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Etymology

Origin of credit utilization ratio

First recorded in 1985–90

Example Sentences

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

From Washington Post • Mar. 1, 2023

“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.

From Washington Post • Feb. 22, 2023

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

From Slate • Jun. 14, 2022

Or you can ask to increase your credit limit, which not only offers you more flexibility to make bigger purchases but also helps lower your credit utilization ratio.

From Seattle Times • Nov. 3, 2021

The formula looks at how much you owe as a percentage of how much available credit you have, otherwise known as your credit utilization ratio.

From Time • May 6, 2013