Credit utilisation ratio
Credit scores & reportsAnother term for credit utilisation, calculated as balance divided by total credit limit.
Overview
Your utilisation ratio can change from month to month as balances and limits change. Lenders often view very high utilisation as higher risk.
It is usually better to keep your ratio low, especially before applying for credit.
Why it matters
- It is a strong factor in credit scoring models.
- It can affect interest rates offered to you.
- Lower ratios can improve eligibility.
FAQs
Is utilisation ratio different from utilisation?
No. It is another way to describe the same concept.
How can I lower my utilisation ratio?
Pay down balances, increase limits responsibly, or reduce spending before statement dates.
Related terms
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