How to Calculate Your Credit Utilization Ratio

Person paying with credit card may not realize their credit utilization ratio.

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Credit utilization is an important piece of your credit health. This ratio shows the percentage of your credit that's being used. Credit utilization factors into your credit score as the level of debt you're carrying. It counts for 30% of your credit score and is the second biggest factor in your credit score, next to payment history.

Managing your credit utilization is important for maintaining a good credit score. As your credit utilization rises, your credit score starts to decrease. Keeping a low credit utilization is good for a healthy credit score and keep yourself out of debt.

Calculating your own credit utilization can help you manage your credit card balances. If your utilization is too high, it's a signal to cut back on your credit card spending to lower your utilization.

Calculating Credit Utilization

Calculating your credit utilization is pretty easy. It only takes a few minutes and a bit of simple math—no complicated equations or tricky math necessary.

You'll need a copy of your latest credit card billing statement or all your billing statements if you want to calculate your total credit utilization. You can also log in to your online account or call your credit card's customer service line to find out your most recent balance and credit limit information. 

A recent copy of your credit report can also be useful because it will include all your account information in one place. Plus, the credit utilization that factors into your credit score is based on the information in your credit report, which could be different than your current balance.

Locate Your Current Balance and Credit Limit 

Locate your current balance and credit limit on your latest credit card billing statement. If your credit limit isn't listed, you can call your credit card's customer service using the number on the back of your credit card to find out. For credit cards without a preset credit limit, the credit card issuer may report your highest balance ever charged in the place of a credit limit.

Divide the Credit Card Balance by the Credit Limit

(In your calculator, enter the credit card balance, press the "divide by" button, then enter the credit limit and press the "equal" button.") Do not clear your calculator yet.

Multiply the Result by 100

(In your calculator press the "multiply" button and enter 100. Then press the "equal" button.) The result is your credit utilization as a percentage.

Example Credit Utilization Calculation

Let's say your credit card balance is $600 and your credit limit is $1,000. You would divide 600 by 1,000 to get .60. Then multiply .60 by 100 to get 60%.

If you want to calculate your credit utilization for all your accounts, first add all the balances. Then add all the credit limits. Divide the total balance by the total credit limit and then multiply the result by 100. The result is your overall credit utilization.

Let's say you have these credit card balances and credit limits:

Credit Card Balance Limit
A $655 $1,000
B $1,256 $4,000
C $890 $3,000
Total $2,801 $8,000

To calculate the total credit utilization for these, you would divide $2,801 by $8,000 to get .35 (after rounding). Then multiply by 100 to get 35%.

How Your Credit Utilization Changes

Your credit utilization can fluctuate as your credit card issuer updates your credit card balance with the credit bureaus. Changes to your credit limits, balance transfers, purchases, payments, and opening new accounts will also affect your credit utilization.

Keeping up with the daily or even monthly changes to your credit utilization can be tough, especially if you have several credit cards. You can best manage your credit utilization by keeping your credit card balances below 30% of the credit limit; the lower the better. Then, do a periodic checkup on your total credit utilization to be sure you're managing your credit cards well.