How to Calculate Credit Card Utilization

Calculate credit card utilization

When it comes to finances, maintaining good credit card utilization is key. This score helps determine your credit score, which in turn helps banks and lenders know if they think you are someone worth lending money to.

If you are looking to buy a house or a car soon, you’ll need good credit. And to make sure you have good credit, you’ll need a credit utilization calculator.

If you want to get out of debt and join the millions of other Americans with a credit score of over 700, finding out your credit utilization ratio is the first step.

What is credit utilization?

Credit utilization is a ratio of how much you owe on all of your accounts compared to how much credit you have.

Simply put, it’s a way for banks and credit card companies to know how creditworthy you are. If you have a high credit utilization score, your credit score will fall.

The best way to keep track of your credit utilization is to stay out of debt. If you have credit cards or other debt, you’ll need to calculate your credit card utilization. This will determine if you have too much debt and need to cut back. (Learn about other personal finance ratios here).

How do you calculate credit utilization?

You can calculate credit card utilization using a simple formula. Take your total credit card balance and divide it by your total credit limit. Then, multiply that number by 100 to find out the percentage.

If you have more than one credit card, you might need to do some organizing first. Make sure you include all of your credit cards in your calculations.

You can easily do this by getting the latest statements from your credit card providers. You should be able to get them online through your account, but a paper statement works as well.

Once you have all of your credit card statements, identify the current balance and credit limit on each card (you can call the company if the limit isn’t stated).

What is the ideal credit utilization ratio?

So how do you know if your credit utilization ratio is too high? Experts generally recommend it should be no higher than 30%, but those with high credit scores often have a ratio of less than 10%.

As an example, a credit utilization score of 69% would be too high and an indication that you should cut down on your credit card use and start paying off your loans.

If you have a low credit utilization ratio, banks take it as an indication that you’re good at managing your money and debts. A high ratio could be a red flag to lenders that you can’t manage your finances.

What is the impact of high credit utilization on your credit?

Credit utilization makes up about 30% of a FICO credit score. The higher your credit utilization, the worse your credit is. That's why it's important to have a low credit utilization score. (Learn more about how your FICO score affects your finances).

The other factors that go into determining your credit score include payment history (35%), length of credit history (15%), new credit (10%), and credit mix (10%).

Credit utilization calculators

To calculate your credit card utilization score, you can do it manually with pen and paper or with a credit utilization calculator you set up in a spreadsheet.

Regardless of if you’re doing it by hand or online, you’ll need to have all of your paperwork and accounts sorted. Make sure you have all of your credit card statements then use this simple formula to calculate your utilization ratio:

Total amount owed / total credit line * 100 

For example, let's say you have three credit cards, one with a limit of $600, one with $1,200, and another with a limit of $800. Let’s then say you owe $300 on the first, $ 700 on the second, and have maxed out the third.

That means you owe a total of $1,800. Divide that by your credit limit of $2,600, and multiply by 100 and you get a credit utilization score of 69%.


If you want to know if you have too much credit card debt, you can easily find out by calculating your credit utilization score. Because this is such a high proportion of your credit score, it’s vital to keep it low if you ever need to get a loan for a house, car, or even a business loan.

Keep track of your utilization score and make sure you pay off your debt as fast as possible. Want to learn more about how your credit works? Be sure to check out our free course on how to improve and maintain your credit!

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