Your credit utilization ratio is one of the most important factors in determining your credit score. It represents the amount of credit you're using compared to your total available credit. For example, if you have a credit limit of $10,000 and your outstanding balance is $2,500, your credit utilization is 25%. Lenders view this ratio as a measure of how responsible you are with credit.

Keeping this ratio low is crucial for maintaining a healthy credit score, as a high utilization rate suggests that you may be overly reliant on credit and could struggle to pay off your debt. On the other hand, keeping your utilization low shows that you are managing credit responsibly, which boosts your score.

What’s the recommended percentage to keep your credit utilization ratio under for optimal credit health? Let’s put your credit knowledge to the test!