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 calculated by dividing your current balance by your credit limit and multiplying by 100.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The ratio shows how much of your available credit you're using. Lower ratios are generally better for your credit score.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO credit score. Keeping utilization below 30% is recommended, and below 10% is ideal for optimal credit scoring.

4. Using the Calculator

Tips: Enter the number of cards you have, then fill in the balance and credit limit for each card. The calculator will automatically compute the utilization percentage for each card.

5. Frequently Asked Questions (FAQ)

Q1: How often should I check my credit utilization?
A: It's good to check monthly, especially before applying for new credit. Most issuers report balances to bureaus once a month.

Q2: Does utilization include all cards or just individual ones?
A: Both matter. Credit scoring models look at per-card utilization and overall utilization across all cards.

Q3: Should I pay off my balance before the due date to lower utilization?
A: Yes, paying before the statement closing date (not just the due date) can help since that's when most issuers report balances.

Q4: Does a 0% utilization rate help my score?
A: While low utilization is good, 0% might suggest you're not using credit at all. A small, non-zero utilization (1-9%) is often ideal.

Q5: How quickly does utilization affect my credit score?
A: Utilization has no memory in scoring models - if you lower it this month, your score can improve immediately.