what is a credit utilization ratio 
a credit utilization ratio refers to the amount of revolving credit a borrower is using at any given time compared with the total amount of credit they have available to them credit utilization ratios come into play in the calculation of credit scores in a typical fico credit scoring formula for example amounts owed which includes credit utilization accounts for 30 of a person s score 3scoring formulas as well as prospective lenders favor individuals with lower credit utilization ratios the idea being that someone with a high ratio may already be overextended or heading there generally speaking it s best for individuals to keep their credit utilization ratios below 30 4the bottom lineutilization fees are one of an assortment of fees that lenders can write into their loan agreements that s one reason borrowers should read these contracts carefully and not focus solely on the interest rate that they are being charged even if a loan contract has a provision for utilization fees a borrower may be able to avoid them if they keep a close eye on their outstanding balance and are careful not to exceed the threshold at which a utilization fee would be triggered 