Quick answer
Credit utilization is the share of available revolving credit you are using. In the broad FICO Score category mix, amounts owed account for 30%, and heavy use of available credit can signal higher repayment risk.
Why it matters
The practical meaning.
Utilization is one of the most extractable credit-score concepts because it connects a simple ratio to an official scoring factor. Lowering revolving balances can improve the information used by scoring models, especially when balances report high relative to limits.
Key points
a.
Focus first on revolving accounts such as credit cards and lines of credit.
b.
Look at both total utilization across cards and high balances on individual cards.
c.
Paying before the statement closes may reduce the balance that gets reported, depending on the issuer.