16 Aug 2021

Understanding Your Credit Utilization Ratio


Your credit utilization ratio is one of the most important factors you must understand when it comes to your credit. In short, your credit utilization ratio is the debt that you owe to the total credit limit of every revolving account on your report.

When it comes to your credit report, your credit utilization ratio can have a major impact. In fact, many aren’t aware that their credit utilization ratio makes up a whopping 30% of their credit score. In essence, if you have a high credit utilization ratio overall, it can drag your credit report down in the dumps.

Even if you decide to add tradelines with a high credit utilization ratio, you still might not see the progress you are looking for.

If you want to get an idea of what your credit utilization ratio is, you must first start by adding up all of the debts that you owe on your revolving accounts. Next, add up all of your credit limits for each of those revolving accounts.

Once you have those both added up, you must divide the total amount by your total credit limit.

Nearly all credit reporting websites offer this metric in an easy-to-understand format.

Checking Your Credit Cards For High Utilization Ratio

Your overall credit utilization ratio might be fairly low, though that does not mean that you do not have a high credit utilization ratio on specific credit cards. Unfortunately, having high credit utilization ratios anywhere can deeply impact your credit, just as adding a single tradeline can.

The troubling thing is, adding a tradeline won’t act as a bandaid for a high utilization ratio.

You might want to consider starting by paying down your credit card debt to get your credit utilization ratio to 20% or lower before you purchase a tradeline. Your money will be better spent if you have a low utilization ratio.

Of course, if you owe a very large amount on your credit card that you are not able to pay off at the moment, paying off your credit might not be possible. In that case, you might want to consider going with some high limit authorized user tradelines.

Understanding Your Credit Utilization Ratio
Understanding Your Credit Utilization Ratio

Regardless, utilization ratios are incredibly important when it comes to your credit and it is crucial that you take them into account when you are thinking of buying authorized user tradelines.

Boost My Credit Score With Authorized User Tradelines

If you’re looking to get tradelines that boost your credit score, you will need to make sure that you manage all of your accounts responsibly and that your utilization ratios are low. When you become an authorized user on an account with a good credit history, you can improve your own credit.

Here at Boost Credit 101, we specialize in helping people like you potentially raise their credit scores with high-quality tradelines. Make sure to reach out to us with any further questions.

Your finances are a big part of your life and can make or break certain situations. When you’re ready to take the next step in your tradeline journey, make sure to get in contact with us!