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Credit Utilization Formula:
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Credit utilization is the ratio of your current credit card balance to your credit limit, 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.
The calculator uses the credit utilization formula:
Where:
Explanation: The formula calculates what percentage of your available credit you're currently using. Lower percentages are better for your credit score.
Details: Credit utilization accounts for about 30% of your FICO credit score. Maintaining a utilization below 30% is generally recommended, with the best scores typically coming from utilization under 10%.
Tips: Enter your current credit card balance and total credit limit in USD. Both values must be positive numbers, with the credit limit greater than zero.
Q1: What's a good credit utilization ratio?
A: Below 30% is good, but for optimal scores, aim for under 10%. The lower your utilization (without being zero), the better for your credit score.
Q2: Does utilization consider all cards or individual cards?
A: Credit scores consider both overall utilization (across all cards) and individual card utilization. High utilization on any single card can hurt your score.
Q3: How often should I check my credit utilization?
A: Monthly, since most credit card companies report balances to credit bureaus once per month (typically your statement balance).
Q4: Does paying off my balance multiple times per month help?
A: Yes, making multiple payments can keep your reported utilization low if your card issuer reports more frequently than just statement dates.
Q5: Does a zero balance hurt my credit score?
A: While 0% utilization is better than high utilization, having a small balance (1-9% utilization) may be slightly better as it shows active, responsible credit use.