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, accounting for about 30% of your FICO score calculation.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio 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 better for your credit score.

3. Importance of Credit Utilization

Details: Maintaining a low credit utilization ratio (typically below 30%) demonstrates responsible credit management and can help improve your credit score. High utilization may indicate risk to lenders.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit in dollars. The calculator will show your utilization percentage. For multiple cards, calculate overall utilization by summing all balances and all limits.

5. Frequently Asked Questions (FAQ)

Q1: What is a good credit utilization ratio?
A: Generally below 30% is good, but for optimal scores, aim for below 10%. The lower the better for your credit score.

Q2: Does utilization affect all credit scores equally?
A: It's a major factor in most scoring models, typically accounting for about 30% of your FICO score.

Q3: When is credit utilization reported?
A: Most card issuers report to credit bureaus once per month, typically on your statement date.

Q4: Does 0% utilization give the best score?
A: Not necessarily. Having some small utilization (1-9%) is often better than 0%, which may suggest inactive accounts.

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