What is the impact of credit utilization on my credit score?
An example of an AI chatbot conversation about credit utilization and its effects on credit scores.
What is the impact of credit utilization on my credit score?
Credit utilization is the ratio of your current credit card balances to your credit limits. It significantly affects your credit score.
How does a high credit utilization ratio affect my score?
A high credit utilization ratio can lower your credit score because it suggests to lenders that you may be over-relying on credit.
What is considered a good credit utilization ratio?
A good credit utilization ratio is typically below 30%. Keeping it lower can positively impact 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 avoiding new charges.
Will closing a credit card affect my utilization ratio?
Yes, closing a credit card can increase your utilization ratio if it reduces your total available credit, potentially lowering your score.
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