Credit Utilization
The percentage of available credit currently being used, calculated by dividing total credit balances by total credit limits across revolving accounts.
High credit utilization, using a large share of available credit, is generally viewed as a risk signal by lenders and can negatively affect both personal and business credit scores, even if every payment has been made on time.
Keeping utilization lower, whether by paying down balances or maintaining higher credit limits relative to usage, is one of the more direct ways a business or individual can support a stronger credit profile ahead of applying for financing.
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