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What is my credit usage ratio

Most people know that a good credit score is determined by paying bills on time and not acquiring too much credit card debt. If you are looking for debt relief, it is important to know your credit usage ratio, also known as credit utilization, because it also has a significant impact on your credit score and credit worthiness. A credit usage ratio is an accurate representation of how someone uses credit and how disciplined they are. It compares the total amount you owe on all of your credit card accounts to your total available credit limit. Credit advisors recommend that a credit usage ratio of less than 35% is a healthy amount. Watch this video to learn how to calculate your credit usage ratio to give you a clearer sense of your financial situation.

Take the total amount you owe on all credit card accounts.
$1,500 + $4,200 + $800 = $6,500
Then take your total available credit limit:
$15,000 + $10,000 + $10,000 = $35,000
Go back to your total amount owed and divide by your total available limit:
$6,500 / $35,000 = .185
Move the decimal 2 spots to the right. And you get 18.5%
A credit usage ratio of less than 50% is considered a healthy amount.
Your credit usage ratio is one of the factors used to calculate your credit score.
So yeah… it’s good to know.

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American Consumer Credit Counseling (ACCC) provides credit counseling, financial education and debt relief options for individuals and families with too much credit card debt or unsecured personal debt. Our certified credit counselors have helped thousands of consumers find credit card debt relief by learning how to reduce debt and how to get out of credit card debt. Our debt assistance services and debt management plans allow consumers to consolidate credit card bills into a single payment, and provide help with negotiating credit card debt in order to lower interest rates and finance charges, to ultimately eliminate debt through a credit card payoff plan.

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