Your utilization rate is a percentage that reflects how much of your available credit you’re using—not the total amount you’re allowed to spend. It’s a ratio, not a fixed limit. For example, using $300 of a $1,000 credit limit equals 30% utilization. Utilization is important for your credit score, but it is calculated using your credit limit, not defining it. The actual limit is set by your card issuer and depends on factors like income, credit history, and existing debt.