 TITLE: How Is Your Credit Score Determined? CONTENT: Amounts Owed\n------------\nAmounts owed, or your credit usage, comes just after payment history in importance when determining credit scores. In part, this category includes how much you owe on loans and how many of your accounts have balances. The main consideration in this category, however, is your credit utilization ratio.\nYour credit utilization ratio, or rate, is determined by comparing the current balances with the credit limits on your revolving accounts, mainly credit cards. To calculate your credit utilization ratio, add up the balances on all your credit card accounts, divide that number by the sum of all your credit card limits, and multiple by 100 to get a percentage. That percentage is your utilization ratio, and generally, lower utilization ratios are better for credit scores.\nCredit scoring models look at each revolving account's utilization rate as well as the overall rate across all accounts. In either case, it's best to keep your utilization under 30%. Those with the best credit scores tend to use under 10% of their available credit.\nThere are different ways to lower your utilization ratio, such as paying down credit card balances or increasing your cards' credit limits. But even if you pay your bill in full each month, you could have a high utilization rate.\nThat's because scoring models calculate utilization rates based on the balance that your credit card issuer reports to the credit bureau, which often happens around the end of each statement period (a few weeks before the bill's due date). Making a payment during your statement period can lower your reported balance and resulting utilization rate. END