The credit utilization ratio refers to how much of your available credit you're currently using. It's calculated by dividing your total credit card balances by your total credit limits. For example, if you have a $1,000 limit and a $300 balance, your utilization is 30%. Credit scoring models like FICO weigh this metric heavily—it typically accounts for 30% of your score. A lower utilization ratio signals responsible credit usage, while a higher one can indicate financial stress. Experts recommend keeping this ratio under 30%, and ideally below 10%, to maintain a healthy credit score.