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 and represents how much of your credit limit you're utilizing.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

Where:

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

Explanation: The ratio shows what percentage of your available credit you're using at any given time.

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. High utilization may indicate you're overextended and could be a higher credit risk.

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 ratio below 30% is recommended, with under 10% being ideal for the best credit scores.

Q2: Does this include all my credit cards?
A: You can calculate per-card utilization or overall utilization by summing all balances and all limits.

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

Q4: Does paying off my balance multiple times per month help?
A: Yes, making multiple payments can keep your reported utilization low even if you use your card frequently.

Q5: Does a 0% utilization ratio help my score?
A: While 0% shows no debt, having some small utilization (1-10%) is often better than 0% for scoring purposes.