How to Calculate Your Credit Utilization Ratio

Credit utilization is calculated by dividing the balance by credit limit for each card and for all cards together.
By NerdWallet 
Edited by Kathy Hinson

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Your credit utilization ratio is how much you owe on all your revolving accounts, such as credit cards, compared with your total available credit — expressed as a percentage. It's important because it's one of the biggest factors in your credit score.

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How to calculate your credit utilization ratio

You can calculate credit utilization yourself using this formula:

  • Add up the balances on all your credit cards.

  • Add up the credit limits on all your cards.

  • Divide the total balance by the total credit limit.

  • Multiply by 100 to see your credit utilization ratio as a percentage.

For example, say you have two credit cards, both carrying a $500 balance. One card has a $2,000 credit limit and the other a $3,000 credit limit. That works out to a credit card utilization of 20%.

You can also use the credit utilization calculator below to calculate it for you, or sign up for a free weekly credit score update that shows your utilization.

Use a credit utilization calculator

There are two types of credit utilization ratios: per-card and overall. Per-card utilization measures how much of each card’s credit limit you’re using, while overall utilization takes all your cards and their limits into account.

Enter the balance and credit limit for up to three cards in this calculator to see your per-card and overall utilization figures:

» MORE: See more financial calculators from NerdWallet

What is a good credit utilization ratio?

NerdWallet suggests using no more than 30% of your limits, and less is better. Charging too much on your cards, especially if you max them out, is associated with being a higher credit risk. That’s why running up your cards will lower your score.

Per-card vs. overall utilization — which is more important?

Both per card and overall utilization rates are important. Credit scores can take the ratio into account in both ways — for each card and overall.

Why that’s important to know: If you try to counteract the negative effects of a maxed-out credit card by opening a new card and keeping its balance at $0, the high utilization ratio on the maxed-out card still may hurt your score.

If you avoid using more than 30% of the credit limit on any one card, the overall usage takes care of itself.

There are strategies you can use to lower your credit utilization and make sure it stays below the recommended amount. The less of your available credit you use, the better it is for your credit score.

Working toward a good credit score will make it easier for you to qualify for the best rates on loans, insurance policies and other financial products.

» MORE FOR CANADIAN READERS: What's a good credit utilization ratio?

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