{"id":1143,"date":"2023-02-18T00:31:59","date_gmt":"2023-02-18T06:31:59","guid":{"rendered":"http:\/\/fitbuxarticles.fitbux.com\/?p=1143"},"modified":"2023-02-18T10:08:09","modified_gmt":"2023-02-18T16:08:09","slug":"credit-utilization-ratio","status":"publish","type":"post","link":"https:\/\/www.fitbux.com\/articles\/credit-utilization-ratio\/","title":{"rendered":"Using The Credit Utilization Ratio To Increase Your Credit Score"},"content":{"rendered":"

I’ve had the honor of doing our student loan workshop for 100+ universities throughout the country.\u00a0 One common question that I consistently receive is How do I increase my credit score? There are many ways to increase your credit score.\u00a0 However one of the most effective ways is to develop a strategy to manage your credit utilization ratio.<\/p>\n

Good credit is important because you can get a better interest rate in the future when you get a loan such as when you graduate and want to refinance your student loans <\/a>or save money on a conforming home loan<\/a>.<\/p>\n

This article discusses what the credit utilization ratio is, questions that arise about the ratio, a strategy to increase your credit score<\/a> by effectively managing your optimization ratio, and a secret not known by many about the credit utilization ratio that can really increase your credit score or harm it (YOU\u2019LL WANT TO READ TO THE END IF OWN A HOME)<\/strong>.<\/p>\n

What is the Credit Utilization Ratio<\/h2>\n

The credit utilization ratio is the amount you have borrowed relative to how much available credit you have.<\/p>\n

For example, if you have a single credit card with a credit limit of $10,000 and you have $1,000 outstanding then your credit utilization ratio is 10%.<\/p>\n

The ratio primarily concerns revolving credit, i.e. credit cards, so that is what we will highlight today.<\/p>\n

There is a lot of research supporting the fact that this ratio is one of the most important factors in determining your credit score<\/a>.<\/p>\n

Therefore, knowing how to manipulate it greatly increases your credit score.<\/p>\n

Managing Your Credit Utilization Ratio Increases Your Credit Score<\/h2>\n

The following strategy is one I personally implemented when I was 25 and has resulted in having an 825 credit score.<\/p>\n

If you follow these steps you should be able to have a combined credit limit over $100,000 within a couple of years.<\/p>\n

This helps you financially. For example, if you have an emergency expense, let\u2019s say $2,500 for car repairs, you can put it on your credit card and the affect will be minimal because your credit utilization ratio will only be 2.5%.<\/p>\n