Credit Utilization Rate Formula:
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The Credit Utilization Rate (CUR) is the percentage of your available credit that you're currently using. It's a key factor in calculating your credit score and shows lenders how responsibly you're managing your credit.
The calculator uses the Credit Utilization Rate formula:
Where:
Explanation: The equation calculates what percentage of your available credit you're currently using by dividing your balance by your credit limit and multiplying by 100.
Details: Credit utilization makes up about 30% of your FICO credit score. Keeping your utilization below 30% is generally recommended, and below 10% is ideal for the best credit scores.
Tips: Enter your current credit card balance and total credit limit in dollars. Both values must be positive numbers, and the credit limit must be greater than zero.
Q1: Why is credit utilization important?
A: It's a major factor in credit scoring models, showing lenders how much of your available credit you're using. Lower utilization demonstrates responsible credit management.
Q2: What is a good credit utilization ratio?
A: Generally, below 30% is good, and below 10% is excellent. The lower your utilization, the better it is for your credit score.
Q3: Should I calculate utilization per card or overall?
A: Both matter. Credit scoring models look at both individual card utilization and your overall utilization across all cards.
Q4: When is credit utilization reported?
A: Most credit card companies report your balance to credit bureaus once per month, typically on your statement closing date.
Q5: How can I lower my credit utilization?
A: You can pay down balances, request credit limit increases (without increasing spending), or open new credit accounts (responsibly).