1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is a financial metric that shows what percentage of your available credit you're currently using. It's a key factor in calculating credit scores and assessing financial health.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

Where:

• \( B \) — Current credit card balance (in dollars)
• \( CL \) — Total credit limit (in dollars)
• \( CUR \) — Credit utilization ratio (percentage)

Explanation: The ratio compares your current credit card debt to your total available credit, expressed as a percentage.

3. Importance of Credit Utilization

Details: Credit utilization accounts for about 30% of your FICO score. Lower ratios (generally below 30%) are better for your credit score and demonstrate responsible credit management.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit in dollars. Both values must be positive numbers, with credit limit greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good credit utilization ratio?
A: Generally, keeping your CUR below 30% is recommended, but the lower the better for your credit score.

Q2: Does CUR consider all credit cards?
A: Yes, you should calculate both per-card and overall utilization across all cards.

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

Q4: Does paying off balances multiple times per month help?
A: Yes, making multiple payments can keep reported balances (and thus your CUR) lower.

Q5: Does CUR affect business credit scores?
A: While important for personal credit, business credit scores may use different formulas.