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 available credit you're using at any given time.

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 what percentage of your available credit you're using. Lower ratios are better for your credit score.

3. Importance of Credit Utilization

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

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit. Both values must be positive numbers, with credit limit greater than zero.

5. Frequently Asked Questions (FAQ)

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 suggests higher risk.

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 credit utilization?
A: Monthly, as credit card issuers typically report balances to credit bureaus once per month.

Q4: Does utilization consider all cards or individual cards?
A: Both. Scoring models look at overall utilization across all cards and utilization on individual cards.

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