What is credit utilization and how does it affect my loans?

What is credit utilization and how does it affect my loans?

Credit utilization is the ratio of your current credit card balances to your credit limits. It affects your credit score, which in turn can impact your loan eligibility and interest rates.

What is a good credit utilization ratio?

A good credit utilization ratio is typically below 30%. Keeping it lower can positively influence your credit score.

How can I improve my credit utilization?

You can improve your credit utilization by paying down existing balances, increasing your credit limits, or spreading your spending across multiple cards.

Does credit utilization affect mortgage rates?

Yes, credit utilization can affect mortgage rates. A lower utilization ratio can lead to a better credit score, which may qualify you for lower rates.

What should I do if my credit utilization is high?

If your credit utilization is high, consider paying down your balances, avoiding new charges, and requesting a credit limit increase.