1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is a percentage that represents the amount of credit you're using compared to your total available credit. It's a key factor in calculating your credit score and assessing your credit health.

2. How Does the Calculator Work?

The calculator uses the credit utilization formula:

Where:

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

Explanation: The formula calculates what percentage of your available credit you're currently using. Lower percentages are generally better for your credit score.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO credit score. Maintaining a ratio below 30% is generally recommended, with the best scores typically coming from ratios under 10%.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why is credit utilization important?
A: It shows lenders how much of your available credit you're using. High utilization can indicate financial stress and may lower your credit score.

Q2: What is a good credit utilization ratio?
A: Below 30% is good, under 10% is excellent. The lower your ratio, the better it is for your credit score.

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

Q4: Does this include all my credit cards?
A: You should calculate both per-card and overall utilization, as both affect your credit score.

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