Glossary
Credit utilization ratio
The share of your available revolving credit you are currently using — the second-biggest factor in your credit score, after payment history.
Utilization is your total credit-card balances divided by your total credit limits, both overall and per card. Scoring models reward staying well under 30%, and the best scores typically sit under 10%. Because card issuers report a balance snapshot once a month, utilization can swing your score within a single billing cycle — paying down a balance before the statement closes, not just before the due date, is the fastest lever most people have to raise their score.
Related terms
- HELOC A revolving credit line secured by your home, usually at a variable rate — draw and repay as needed, like a credit card backed by the house.
- Soft credit check A credit check that does not affect your score — used for pre-qualification, background checks, and checking your own report.
- Credit score A 300–850 number summarizing your credit risk. It is the single biggest lever on the rate a lender offers you.
- PMI Private mortgage insurance — a monthly premium that protects the lender, not you, when your down payment is under 20%.
- Equity The slice of your home you actually own — its market value minus what you still owe on it.
- Promissory note The legal document where you promise to repay a loan under specific terms — amount, rate, schedule, and what happens on default.