1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is a key factor in credit scoring models that measures the amount of credit you're using compared to your total available credit. It's expressed as a percentage and is second only to payment history in importance for your credit score.

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 currently using. Lower ratios are better for your credit score.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO score. Experts recommend keeping your utilization below 30% on individual cards and across all cards collectively for optimal credit health.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit in 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: Below 30% is good, but the best scores typically have ratios under 10%. The lower your utilization, the better for your credit score.

Q2: Does CUR affect all credit scores equally?
A: While important in all major scoring models, the exact weight may vary slightly between FICO and VantageScore models.

Q3: Should I pay my balance before the statement date?
A: Yes, paying before the statement closing date can lower your reported utilization since most cards report the statement balance.

Q4: Does CUR include all credit cards?
A: You should calculate both per-card and overall utilization, as both can impact your score.

Q5: Can increasing my credit limit help my score?
A: Yes, if you maintain the same spending, a higher limit will lower your utilization ratio, potentially improving your score.