What Is Credit Utilization?
Your credit utilization ratio is the percentage of your total available revolving credit that you are currently using. It is one of the most influential factors in credit scoring models, accounting for roughly 30% of a typical FICO score. Lenders view a lower ratio as a sign that you manage credit responsibly and are not over-extended.
How to Use This Calculator
Enter the combined balances across all your credit cards and the combined credit limits of those cards. The calculator divides your total balances by your total limits and multiplies by 100 to express the result as a percentage. It also shows how much credit you still have available and a quick rating of where you stand.
The Formula Explained
The math is simple: $$\text{Utilization} = \frac{\text{Total Balances (\$)}}{\text{Total Credit Limits (\$)}} \times 100\%$$. For example, if you owe $3,000 across cards with a combined limit of $10,000, your utilization is \((3{,}000 \div 10{,}000) \times 100 = 30\%\).
Worked Example
Suppose you carry balances of $1,500 and $750 on two cards, totaling $2,250, with combined limits of $9,000. Utilization $$= (2{,}250 \div 9{,}000) \times 100 = 25\%.$$ That falls in the "Good" range, with $6,750 of available credit remaining.
FAQ
What is a good utilization ratio? Most experts recommend keeping it below 30%, and under 10% is considered excellent for maximizing your score.
Does paying off a card help? Yes. Lowering your balances directly reduces your utilization, which can quickly improve your credit score.
Should I close unused cards? Closing a card removes its limit from the total, which can raise your utilization ratio. Often it is better to keep low-fee cards open.
