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Question 2

Credit utilization is a simple ratio that compares how much of your available revolving credit you’re using. Lenders and scoring models watch utilization because it signals whether someone is relying heavily on borrowing relative to limits — a rising utilization rate can indicate cash strain or increased risk. For example, if you have multiple credit cards with different limits, your overall utilization uses the sum of balances divided by the sum of limits. Small shifts in utilization can move a score, especially if you’re near common thresholds like 30% or 50%. Managing utilization can be quick win: paying down balances before the statement date or requesting a higher limit (careful with hard inquiry risks) can reduce the percentage without changing payment history. The next question gives a concrete example to calculate your utilization percentage.

If balances are $1,200/$600/$600 and limits are $3,000/$2,000/$1,000, what is the overall credit utilization percent?

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By Wise Wallet

Refinancing can save money when lower rates reduce interest enough to cover closing costs within your expected time in the home.