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 (in currency units)
• \( CL \) — Credit limit (in currency units)
• \( CUR \) — 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 ratios (generally below 30%) are better for your credit score and demonstrate responsible credit management.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit in currency units (e.g., 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, but the lower the better for 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 this include all my credit cards?
A: You should calculate both per-card and overall utilization, as both affect your credit score.

Q4: How can I improve my credit utilization ratio?
A: Pay down balances, request credit limit increases, or open new credit accounts (responsibly).

Q5: Does 0% utilization hurt my score?
A: While 0% is better than high utilization, having some small utilization (1-10%) may be slightly better for scoring.