Straight from the help desk

[vanillabean]

Right or wrong?

"Credit utilization ratio: Amount of available credit you're not using"

Increase your credit limit

[Anonymous]

The way she summarized that... no wonder most of the country is clueless and confused on how everything works!

[llecs]

There was some doublespeak going on in that video.

First she says and is illustrated:

Credit utilization ratio: Amount of available credit you're not using

Then she goes on:

...But if you are only using $3,000 [on a CL of $10,000], then you are only using 30% of your available credit....so you have a lower credit utilization score.  The video displays credit utilization as 30%.

The video graphics were mostly right, but what she was saying or trying to imply was partly wrong. It sounded like she was trying to bring across that if you use 30%, then your util is at 70% of non-usage as indicated by the first statement. Then the graphic gets it right, but she incorrectly mentions a "lower utilization score" by having a lower util, as if to say a lower util is bad.

Per FICO's calcs, the utilization ratio on CCs is amount used divided by the total CL and expressed as a percentage.

Now some FAKOs calculate it the opposite way. They look and score based on the percentage not used and that's where the confusion comes in this video. Also, some FAKOs score based on your total CLs, rather than a percentage. I think a TransRisk score does that. It always annoyed me when it said that my total CLs were too low. FICO doesn't care if you have $500 or $500,000 in CLs. It scores based on what you used of those CLs.

[Wolf3]

Technically, a ratio is not the percentage. 

If you use $3,000 out of $10,000.   The ratio is 0.3 .    Credit utilization by FICO is percentage, 100 x the ratio or 30 per cent.

She was wrong on 2 counts.

[vanillabean]

"FICO doesn't care if you have $500 or $500,000 in CLs. It scores based on what you used of those CLs."

Let's say that you have one credit card with a reported $1,000 credit limit and that your reported monthly balance is $90. That makes the util 9%.

You can bring down the util to 1% in two basic ways: you can increase the credit limit by $8,000, or you can pay $80 before the statement cut.

Somehow the latter seems easier than the former