1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is the percentage of your available credit that you're currently using. It's a key factor in calculating your credit score, with financial experts recommending keeping it at 30% or below for optimal credit health.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

Where:

• \( B \) — Current credit card balance (currency unit)
• \( CL \) — Credit limit (currency unit)
• \( CUR \) — Credit utilization ratio (%)

Explanation: The ratio shows what portion of your available credit you're using. Lower ratios (≤30%) are better for your credit score.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO score. Maintaining low utilization shows lenders you're not over-reliant on credit and can manage your finances responsibly.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit. The calculator will show your utilization percentage and whether you're within the recommended range.

5. Frequently Asked Questions (FAQ)

Q1: Why is 30% the recommended utilization?
A: Research shows people with the best credit scores typically use less than 30% of their available credit.

Q2: Should I aim for 0% utilization?
A: While 0% shows no debt, some utilization (1-10%) is actually better as it shows active, responsible credit use.

Q3: How often should I check my utilization?
A: Monthly, as credit card issuers typically report balances to bureaus once per month.

Q4: Does utilization consider all cards or individual cards?
A: Both matter - overall utilization across all cards and individual card utilization are factors.

Q5: How can I lower my utilization?
A: Pay down balances, request credit limit increases, or open new credit accounts (responsibly).