Your credit utilization ratio is the sum of your revolving debt balances (i.e., credit cards, HELOC) divided by your total credit limits, then converted to a percentage.
Creditors generally want customers to have utilization ratios under 30%.
A high ratio can lead to low credit scores, which can make it hard to qualify for a loan or credit card with a competitive interest rate. A high ratio might keep you from getting approved at all.
You can reduce your credit utilization ratio and boost your credit scores by reducing your debt load.
Another approach is to increase your total available credit. You can ask companies you already do business with to raise your credit limits or open a new credit card account.
Don’t sabotage yourself. If having more available credit would tempt you to overspend, focus on paying down your balances instead.
