This article discusses the credit utilization ratio, which is the ratio of money owed on loans and credit cards to the total credit allowed. It is important for calculating credit scores and gives lenders insight into credit management. A lower ratio indicates responsible credit behavior, while a consistently high ratio suggests reliance on credit and potential financial stress. It is generally recommended to keep the ratio below 30 percent, with 25-30 percent being ideal. To maintain a healthy ratio, spend wisely within limits, pay back credit card balances in full, and spread expenses across multiple cards.