What is my credit utilization ratio?

Your credit usage ratio refers to the amount of your overall available credit that you’ve used.  Lenders consider your credit usage ratio when assessing your financial stability, and it also directly impacts your credit score. Your credit usage ratio can be calculated with the following formula:

Credit Usage Ratio = Total Credit Card Balances / Total Credit Card Limits

In general, it's recommended that you keep your credit use ratio at or below 30%.

A Key Example

Say you have two credit cards with limits of $3,000 and $1,500, making your total credit limit $4,500. If they carry balances of $400 and $300, respectively, your total credit card balance is $700, and your credit usage ratio calculation would be:

700 / 4500 = Credit Usage Ratio

700 / 4500 = 0.155

Credit Usage Ratio is 15.5%.

In this case, your credit usage ratio is very healthy.