How to Determine Credit Card Usage

Maintaining appropriate credit card utilization is essential when it comes to money. This score aids in determining your credit score, which in turn enables banks and lenders to decide whether they should lend money to you.

You’ll need strong credit if you intend to buy a house or a car soon. Additionally, you’ll need a credit usage calculator to make sure your credit is good.

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

Credit utilization: What is it?

The ratio of your total debt to your available credit is known as your credit usage.To put it simply, it’s a method for banks and credit card firms to determine your creditworthiness. Your credit score will decrease if you have a high credit utilization rate.

Staying debt-free is the best way to monitor your credit utilization. You must figure out your credit card utilization if you have credit cards or other debt. If you have too much debt, you’ll be able to tell if you need to make some savings.

How is credit utilization determined?

Utilization of credit cards can be determined using a straightforward method. Divide your overall credit card balance by your available credit limit. The percentage can then be calculated by multiplying that amount by 100. 

You might need to first organize if you have multiple credit cards. Make sure all of your credit cards are accounted for in your calculations. 

Obtaining the most recent statements from your credit card companies will make this task simple for you. They need to be accessible through your account online, but a printed statement also suffices. 

Determine the current balance and credit limit on each card once you have all of your credit card bills (you can call the provider if the limit isn’t listed).

What credit usage ratio is ideal?

How do you tell whether your credit usage rate is too high, then? Although most experts advise against having it exceed 30%, people with excellent credit frequently have a ratio of less than 10%.For instance, a credit utilization score of 69% would be excessive and a sign that you should start using cash instead of credit cards and reduce your credit card usage.

Banks view a low credit utilization ratio as a sign that you have solid debt and money management skills. Lenders may be concerned that you can’t manage your money if your ratio is high.

What effects can high credit usage have on your credit?

A FICO credit score is based in part on how much credit is being used. Your credit is poorer if you have a higher credit utilization rate. Because of this, it is crucial to have a low credit utilization score. (Learn more about the financial impact of your FICO score. 

Payment history (35%), duration of credit history (15%), new credit (10%), and credit mix (10%) are additional elements that determine your credit score.

Calculators for credit usage

You can use a credit utilization calculator you set up in a spreadsheet or do it manually with a pen and paper to figure out your credit card utilization score.

You’ll need to have your documentation and accounts organized, whether you’re doing it manually or online. Use the following straightforward technique to get your utilization ratio after making sure you have all of your credit card statements:

Total credit line/total debt owing divided by 100

Let’s imagine, for illustration purposes, that you have three credit cards, each with a maximum of $600, $1200, and $800. Say you have a balance of $300 on the first card, $700 on the second, and the maximum on the third 

You therefore owe a total of $1,800. This gives you a credit utilization score of 69% when divided by your $2,600 credit limit and multiplied by 100.


Calculating your credit utilization score will quickly reveal whether you have too much credit card debt. If you ever need to receive a loan for a house, car, or even a business loan, it’s critical to maintain this score because it makes up such a large portion of your credit score.

Make sure to monitor your utilization score and pay off your debt as quickly as possible. Do you want to know more about how your credit functions? Check out our free course on maintaining and improving your credit!

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