How to Calculate Your Credit Utilization Ratio

Image shows a white woman calculating her credit utilization ratio online. Text reads: "Credit utilization ratio: find your credit balance and credit limit for all of your accounts; divide your current balances by your credit limits; multiply this result by 100"

Image by Elise Degarmo © The Balance 2020

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 scoring, 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 for keeping 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 ratio.

Calculating Credit Utilization

Calculating your credit utilization is fairly simple. It only takes a few minutes and a bit of basic math.

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 from your current balance.

Divide Balance by 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 your total balance by your credit limit, then multiply that number by 100. 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 ratio.

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. But the lower, the better: According to Experian, one of the three major credit bureaus, the average credit utilization ratio for a person with a credit score over 800 is 11.5%.

Do a periodic checkup on your total credit utilization to be sure you're managing your credit cards well.