The credit utilization ratio is a measure of how much of your available credit you are using. It is calculated by dividing the amount of your total credit card balances by the total amount of your available credit limits.
The higher your ratio, the more likely it is that you will be seen as a high-risk borrower and will have to pay higher interest rates on loans. If you are close to or above the 30% threshold, it may make sense to pay down some of your balances or increase your available credit limits.
What is a Credit Utilization Ratio?
A credit utilization ratio is a calculation that measures how much of a person's available credit they are using. The higher the ratio, the more likely it is that the person will be unable to pay their bills on time and may need to use cash or borrow money.
In order to calculate your credit utilization ratio, simply divide your total outstanding balance by your total available credit limit. For example, if you have $5,000 in outstanding debt and a $10,000 limit on your card, then your credit utilization ratio would be 50%.
How To Calculate Your Credit Utilization Ratio
The credit utilization ratio is a measure of the amount of credit available to a borrower relative to the amount of credit they are using. It is calculated by dividing the total outstanding balance on all revolving and installment loans by the total credit limit.
The lower your utilization ratio, the more likely you'll be able to qualify for new loans or lines of credit in the future. The higher your utilization ratio, the less likely you'll be able to qualify for new loans or lines of credit in the future.
What is the ideal credit utilization ratio?
The credit utilization ratio is the percentage of how much debt a borrower has to the total amount of available credit. It is calculated by dividing a borrower's total credit card balances by his or her total available credit. The higher the number, the more risk of defaulting on payments.
It is important to keep in mind that this ratio should be below 30% as this means that you are not using all your available credit and are able to maintain your payments if something were to happen.
Call on (888) 803-7889 & know your Credit Utilization Ratio!
Comments