Definition
The share of your available credit card limits that you are using, a major factor in most credit scores.
What it means
Credit utilization, or the utilization ratio, compares your revolving balances with your credit limits. It is usually figured for each card and across all cards. Lower utilization generally helps your score, and the CFPB suggests keeping it low; many educators mention staying under 30%, and people with the highest scores often use much less. The balance that counts is usually the one on your statement, so paying down a card before the statement date can lower the reported figure even if you pay in full every month. Closing an unused card can raise your utilization because it removes available credit. Installment loans, such as car loans and mortgages, are generally not part of this ratio. Utilization has no memory in most scoring models, so it can improve quickly once balances drop.
Example
Two cards with limits of $3,000 and $2,000 ($5,000 total) and balances of $1,200 and $300 ($1,500) give a utilization of 30%. Paying $1,000 brings it down to 10%.
Illustrative numbers only. Your situation will differ.