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Your credit utilization rate, sometimes called your credit utilization ratio, is the amount of revolving credit you're currently using divided by the total amount of revolving credit you have available. In other words, it's how much you currently owe divided by your credit limit. It is generally expressed as a percent.
- How is utilization ratio calculated?
- What's a good credit utilization ratio?
- What is best credit utilization?
- Is 50 percent credit utilization bad?
How is utilization ratio calculated?
How to Calculate Your Credit Utilization
- Add up all of your revolving credit balances.
- Add up all of your credit limits.
- Divide your total revolving credit balance (from Step 1) by your total credit limit (from Step 2).
- Multiply that number (from Step 3) by 100 to see your credit utilization as a percentage.
What's a good credit utilization ratio?
To maintain a healthy credit score, it's important to keep your credit utilization rate (CUR) low. The general rule of thumb has been that you don't want your CUR to exceed 30%, but increasingly financial experts are recommending that you don't want to go above 10% if you really want an excellent credit score.
What is best credit utilization?
While there is no magic number for the ideal credit utilization ratio, financial experts generally recommend that you keep the rate no higher than 30 percent. Using the example of a $2,000 credit limit across all your credit cards, that means you should aim to carry a balance of no more than $600 in any given month.
Is 50 percent credit utilization bad?
Carrying a high balance on a credit card for a short period of time won't do long-term damage, but it's still important to keep your credit utilization ratio low. Experts advise keeping your usage below 30% of your limit — both on individual cards and across all your cards.
