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Credit Card Utilization Rate Calculator

Credit Utilization Rate Formula:

\[ CUR = \left(\frac{B}{CL}\right) \times 100 \]

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1. What is Credit Utilization Rate?

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.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Rate formula:

\[ CUR = \left(\frac{B}{CL}\right) \times 100 \]

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.

3. Importance of Credit Utilization

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.

4. Using the Calculator

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.

5. Frequently Asked Questions (FAQ)

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).

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