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Credit Card Utilization Ratio Calculator

Credit Utilization Ratio Formula:

\[ CUR = \frac{B}{CL} \times 100 \]

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1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) measures how much of your available credit you're using. It's a key factor in calculating credit scores, representing the percentage of your total credit limit that's currently being used.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

\[ CUR = \frac{B}{CL} \times 100 \]

Where:

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

3. Importance of Credit Utilization

Details: Credit utilization accounts for about 30% of your FICO score. Keeping your utilization below 30% is recommended, and below 10% is ideal for optimal credit scoring.

4. Using the Calculator

Tips: Enter your current credit card balance and total credit limit. 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 may indicate higher risk.

Q2: What's a good credit utilization ratio?
A: Below 30% is good, below 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, as credit card issuers typically report balances to credit bureaus once per month.

Q4: Does utilization include all credit cards?
A: Both individual card utilization and total utilization across all cards are important factors.

Q5: Can I improve my ratio without paying down debt?
A: Yes, by requesting credit limit increases (without increasing spending) or opening new credit accounts (though this may temporarily lower your score).

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