1. What is Credit Card Utilization?

Credit card 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 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:

• \( Balance \) — Current credit card balance in dollars
• \( Limit \) — Credit card limit in dollars

Explanation: The formula calculates what percentage of your available credit you're currently using. Lower utilization rates are generally better for your credit score.

3. Importance of Credit Utilization

Details: Credit utilization makes up about 30% of your FICO credit score. Keeping your utilization below 30% is generally recommended, with lower percentages being even better for your credit health.

4. Using the Calculator

Tips: Enter your current credit card balance and your credit limit in dollars. Both values must be positive numbers, and the limit must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good credit utilization ratio?
A: Generally, keeping your utilization below 30% is good, but for the best credit scores, aim for below 10%.

Q2: Does utilization consider all cards combined or individually?
A: Credit scoring models look at both overall utilization across all cards and individual card utilization.

Q3: How often should I check my credit utilization?
A: It's good to monitor your utilization monthly, as credit card companies typically report balances to credit bureaus once a month.

Q4: Can I improve my utilization by increasing my credit limit?
A: Yes, increasing your credit limit while maintaining the same balance will lower your utilization percentage.

Q5: Does paying off my balance multiple times per month help?
A: Making multiple payments can help keep your reported balance low, which may improve your utilization ratio.