Credit Utilization Ratio Formula:
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The Credit Utilization Ratio (CUR) measures how much of your available credit you're using. It's a key factor in calculating credit scores and assessing financial health.
The calculator uses the Credit Utilization Ratio formula:
Where:
Explanation: The ratio shows what percentage of your available credit you're currently using. Lower percentages are generally better for your credit score.
Details: Credit utilization accounts for about 30% of your FICO score. Keeping your utilization below 30% is recommended, and below 10% is ideal for optimal credit scores.
Tips: Enter your current credit card balance and total credit limit in any currency (but both must be in the same unit). The calculator will show your utilization percentage.
Q1: Why is credit utilization important?
A: It's a major factor in credit scoring models, showing lenders how responsibly you use credit. High utilization may suggest financial stress.
Q2: What's a good credit utilization ratio?
A: Below 30% is good, below 10% is excellent. The lower your utilization, the better it is for your credit score.
Q3: How often should I check my utilization?
A: Monthly, since credit card issuers typically report balances to credit bureaus once per month.
Q4: Does utilization include all cards?
A: Both individual card utilization and total utilization across all cards matter for your credit score.
Q5: How can I lower my utilization?
A: Pay down balances, request credit limit increases, or open new credit accounts (but avoid applying for too much new credit at once).