1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) represents the percentage of your available credit that you're currently using. 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 Ratio formula:

Where:

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

Explanation: The ratio shows what portion 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 utilization rates (generally below 30%) are better for your credit score.

4. Using the Calculator

Tips: Enter your current credit card balance and your total credit limit. 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 utilization below 30% is recommended, with under 10% being ideal for maximizing your credit score.

Q2: How often should I check my credit utilization?
A: It's good practice to check at least monthly, as credit card issuers typically report balances to credit bureaus once a month.

Q3: Does utilization include all cards?
A: Both individual card utilization and overall utilization across all cards are important factors in your credit score.

Q4: How can I lower my credit utilization?
A: You can pay down balances, request credit limit increases, or open new credit accounts (though this may temporarily lower your score).

Q5: Does 0% utilization hurt my score?
A: While 0% utilization won't hurt much, showing some small utilization (1-9%) is often slightly better for your score.