1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is a key factor in credit scoring models that shows what percentage of your available credit you're using. This calculator specifically calculates the ratio for a $1000 balance.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

Where:

• \( CL \) — Credit limit (in dollars)
• 1000 — Fixed balance amount

Explanation: The formula calculates what percentage of your credit limit a $1000 balance would represent.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO score. Lower ratios (typically under 30%) are better for your credit score.

4. Using the Calculator

Tips: Enter your total credit limit in dollars. The calculator will show what percentage a $1000 balance would represent of your available credit.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate for $1000 specifically?
A: This provides a standardized way to compare utilization across different credit limits.

Q2: What's a good credit utilization ratio?
A: Generally below 30%, with the best scores often having ratios under 10%.

Q3: Does this include all my credit cards?
A: This calculator is for a single credit limit. For overall utilization, sum all balances and all limits.

Q4: How often does utilization affect my score?
A: Utilization has no memory - it's calculated based on your current reported balances.

Q5: Should I pay my balance before the statement date?
A: Yes, paying before the statement date can lower your reported utilization.