1. What is Credit Utilization?

Credit utilization is the ratio of your total credit card balances to your total credit limits, expressed as a percentage. It's a key factor in calculating your credit score and represents how much of your available credit you're using.

2. How Does the Calculator Work?

The calculator uses the credit utilization formula:

Where:

• Sum Balances — Total of all credit card balances (USD)
• Sum Limits — Total of all credit card limits (USD)

Explanation: The formula calculates what percentage of your available credit you're currently using.

3. Importance of Credit Utilization

Details: Credit utilization accounts for about 30% of your FICO score. Keeping utilization below 30% is generally recommended, with the best scores typically having utilization below 10%.

4. Using the Calculator

Tips: Enter your total credit card balances and total credit limits in USD. Both values must be positive numbers, with limits 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.

Q2: What's a good credit utilization ratio?
A: Below 30% is good, below 10% is excellent. The lower your utilization, the better for your credit score.

Q3: Should I calculate utilization per card or overall?
A: Both matter. Keep individual card utilization below 30% and overall utilization as low as possible.

Q4: How often should I check my credit utilization?
A: Monthly, as credit card issuers typically report balances to bureaus once per month.

Q5: Does paying off my balance multiple times per month help?
A: Yes, making payments before the statement date can lower your reported utilization.