1. What is Credit Utilization Rate?

The Credit Utilization Rate (CUR) is a key factor in calculating credit scores that represents the percentage of available credit that's being used. It's calculated by dividing your current credit card balance by your credit limit and multiplying by 100.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Rate formula:

Where:

• \( B \) — Current credit card balance (currency unit)
• \( CL \) — Credit limit (currency unit)
• \( CUR \) — Credit utilization ratio (%)

Explanation: The formula shows what percentage of your available credit you're currently using. Lower percentages are better for your credit score.

3. Importance of Credit Utilization Rate

Details: Credit utilization makes up about 30% of your FICO credit score. Experts recommend keeping your utilization below 30%, and ideally under 10% for the best credit score impact.

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: 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, under 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, since credit card issuers typically report balances to credit bureaus once per month.

Q4: Does utilization consider individual cards or total credit?
A: Both matter - scoring models look at overall utilization across all cards and individual card utilization.

Q5: How can I lower my credit utilization?
A: Pay down balances, request credit limit increases (without spending more), or open new credit accounts (responsibly).