Glossary · UK
What is Credit Utilisation Ratio?
The percentage of your available credit that you are actually using, calculated as outstanding balances divided by total credit limits.
Full Definition
The credit utilisation ratio measures how much of your available revolving credit (credit cards and overdrafts) you are currently using. If you have GBP 10,000 of total credit limits and owe GBP 3,000, your ratio is 30 per cent. UK credit reference agencies such as Experian, Equifax and TransUnion treat this as a major factor in your credit score, alongside payment history. A high ratio suggests reliance on borrowing and can make lenders cautious, while a low ratio signals financial headroom. A common guideline is to keep utilisation below around 30 per cent, though lower is generally better. The figure is usually based on your statement balance, so paying down balances before the statement date can help. It matters because a stronger credit profile can improve your chances of approval and access to better interest rates on mortgages, loans and cards. Utilisation is recalculated as balances and limits change, so improvements can show within a month or two.