> For the complete documentation index, see [llms.txt](https://docs.primefi.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.primefi.xyz/product/borrow/health-factor.md).

# Health Factor

The Health Factor acts as a numerical measure of the security of your deposited assets in relation to your borrowed assets and their inherent value. A higher Health Factor indicates greater protection of your funds from potential liquidation.

<figure><img src="/files/tQmg3yr5n29p5QunWKJX" alt=""><figcaption></figcaption></figure>

{% hint style="warning" %}
Should the Health Factor fall to 1 or below, it triggers a liquidation event. In such a scenario, up to 50% of your outstanding borrowing is repaid, and the collateral, along with a liquidation fee, is used to cover this repayment. The amount liquidated from your debt is then considered settled.
{% endhint %}

<figure><img src="/files/EJXgi0bkEmJS9haSy00I" alt="" width="303"><figcaption></figcaption></figure>

This factor is influenced by the liquidation threshold of your collateral in comparison to the value of your borrowed assets.

**Fluctuations in Health Factor** The Health Factor can fluctuate based on changes in the market value of your deposited assets.

Take, for instance, a situation where BTC is your collateral for a USDC loan. If the market value of BTC falls, the value of your collateral diminishes correspondingly. This decline in collateral value adversely affects your Health Factor, heightening the risk of your assets being liquidated.

Maintaining a robust Health Factor benefits your portfolio in two distinct ways:

1. It reduces the likelihood of liquidation, especially when using volatile assets as collateral, aligning with a low-risk investment strategy.
2. It enhances your capacity to borrow, allowing you to leverage more collateral, which is a strategy that entails higher risk.


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