Higher credit utilization decreases your credit score because it signals increased risk to lenders. Credit utilization is the ratio of your current credit card balances to your total available credit. When this ratio is high, it suggests that you may be relying heavily on credit to cover expenses, indicating potential financial stress or difficulty in managing debt. This raises concerns about your ability to make future payments and increases the likelihood of default. Additionally, higher utilization means larger monthly payments, which can strain your finances and further increase the risk that you may miss payments. Because of this, credit scoring models apply more severe penalties as utilization increases, especially above certain thresholds like 30% or 50%, causing your credit score to drop. Lenders view low utilization (generally under 30%) as a sign of responsible credit use and financial stability, which can improve your credit score. In summary, higher credit utilization decreases your credit score because it is a strong indicator of credit risk, financial stress, and potential repayment difficulties for lenders.