Question
Which credit utilization rate would be preferable to a lender on a credit card application? \( 43.0 \% \) \( 83.0 \% \) \( 76.3 \% \) \( 27.5 \% \)
Ask by Parry Rogers. in the United States
Feb 26,2025
Upstudy AI Solution
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Answer
A credit utilization rate of 27.5% is preferable to a lender.
Solution
A lower credit utilization rate indicates that you are using a smaller portion of your available credit, which generally makes you appear less risky to lenders. Out of the options provided, 27.5% is the lowest rate and would be preferable to a lender on a credit card application.
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A credit utilization rate of \( 27.5\% \) would be preferable to a lender on a credit card application. Lenders typically favor a lower credit utilization rate, ideally below 30%, as it indicates responsible credit management and a lower risk of default. This shows that you’re using a manageable portion of your available credit and are less likely to overextend financially. Utilizing more than 30% of your available credit can negatively impact your credit score, making it harder to obtain favorable loan terms or additional credit in the future. Keeping that utilization low, especially below 30%, can help you maintain a healthy credit score and appeal to lenders!
