1. What is Credit Utilization?

Credit utilization is the ratio of your credit card balance to your credit limit, expressed as a percentage. It's a key factor in calculating your credit score.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Credit\ Limit \) — Your total available credit (USD)
• \( 0.30 \) — The optimal utilization percentage (30%)

Explanation: This calculates the balance you should aim to maintain to keep your credit utilization at the ideal 30% level.

3. Importance of 30% Utilization

Details: Maintaining a credit utilization below 30% demonstrates responsible credit management and can help improve your credit score. Utilization above 30% may negatively impact your score.

4. Using the Calculator

Tips: Enter your total credit limit in USD. The calculator will show the maximum balance you should maintain to stay at 30% utilization.

5. Frequently Asked Questions (FAQ)

Q1: Why is 30% the ideal utilization?
A: While lower is better, 30% is widely recognized as the maximum utilization before potential negative impact on credit scores.

Q2: Should I stay below 30% on each card or overall?
A: Both matter, but overall utilization is most important. However, high utilization on any single card may also hurt your score.

Q3: How often should I check my utilization?
A: Monthly, as credit card companies typically report balances to bureaus once per month.

Q4: Does 0% utilization help my score more?
A: While 0% shows no debt, some utilization (1-10%) is often better as it shows active, responsible credit use.

Q5: What if my limit changes?
A: Recalculate your ideal balance whenever your credit limit changes to maintain optimal utilization.