Keep Your Credit Utilization Ratio Below 30%

Your credit utilization ratio is measured by comparing your credit card balances to your overall credit card limit. Lenders use this ratio to evaluate how well you manage your finances. A ratio of less than 30% and greater than 0% is generally considered good.

For example, let’s say you have two cards with individual credit limits of $2,000 and $500 of unpaid balances on one card. Your credit utilization ratio would be 12.5%. In this case, total your debt owed ($500) and then divide that by your total credit limit ($4000).

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