1. What is Credit Utilization Ratio?

The Credit Utilization Ratio (CUR) is the percentage of your available credit that you're currently using. It's a key factor in calculating your credit scores and represents how much of your available credit you're using at any given time.

2. How Does the Calculator Work?

The calculator uses the Credit Utilization Ratio formula:

Where:

• \( B \) — Current credit card balance (in dollars)
• \( CL \) — Credit limit (in dollars)
• \( CUR \) — Credit Utilization Ratio (percentage)

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

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO score. Keeping your utilization below 30% is good, but below 10% is ideal for maximizing your credit score.

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: How often should I check my credit utilization?
A: It's good to check at least monthly, as most credit card companies report balances to credit bureaus once a month.

Q2: Does utilization include all cards or individual cards?
A: Both matter - lenders look at overall utilization across all cards as well as utilization on individual cards.

Q3: When is the best time to pay to lower utilization?
A: Pay down balances before your statement closing date, as that's typically when balances are reported.

Q4: Does 0% utilization hurt my score?
A: While 0% utilization won't hurt much, showing some small utilization (1-9%) is often slightly better for scoring.

Q5: How quickly does utilization affect my score?
A: Utilization has no memory in scoring models, so improvements can help your score as soon as they're reported.