{"id":208706,"date":"2026-02-25T06:59:53","date_gmt":"2026-02-25T14:59:53","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=208706"},"modified":"2026-02-17T15:03:28","modified_gmt":"2026-02-17T23:03:28","slug":"credit-utilization-ratios-and-how-to-calculate-yours","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/credit-utilization-ratios-and-how-to-calculate-yours\/","title":{"rendered":"Credit Utilization Ratios and How to Calculate Yours"},"content":{"rendered":"

A credit\u00a0utilization\u00a0ratio (CUR) is the total amount of revolving credit that you are using (your revolving debt) divided by the total amount of revolving credit that is available to you including credit cards, lines of credit, HELOCs, and more. A CUR can apply to both personal and business financing and is calculated using the following formula:<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>(Total Revolving Debt\/Total Revolving Credit Available) x 100 = Credit Utilization Ratio<\/span>\u00a0<\/span><\/p>\n

If you have $50,000 in available revolving credit and have a balance (the debt you borrowed) of $10,000, you have a 20% credit\u00a0utilization\u00a0ratio.<\/span>\u00a0<\/span><\/p>\n

(10,000\/50,000) x 100 = 20%<\/span>\u00a0<\/span><\/p>\n

Credit\u00a0utilization\u00a0ratios are\u00a0checked by businesses\u00a0that\u00a0provide financial products, such as leases or loans. These ratios help them\u00a0determine\u00a0how risky\u00a0a\u00a0borrower or applicant is. But\u00a0don\u2019t\u00a0worry about your credit score being impacted.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

This information is\u00a0usually\u00a0found through a\u00a0soft inquiry (also known as a soft pull), so your score\u00a0shouldn\u2019t\u00a0be affected. So,\u00a0where do you want your numbers to be?\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

There are averages to try and stay below, but certain businesses will have higher usages like a seasonal gift shop stocking up for the busy season or a real estate investor\u00a0purchasing\u00a0multiple properties and using revolving credit for short-term expenses.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The same can go for a business or person that used their credit card to pay a tax\u00a0bill but\u00a0will clear the debt over the next two months. This is when knowing your\u00a0ideal\u00a0number and being able to explain it to the lending company matters.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

Good and Bad Credit Utilization Ratio Numbers<\/span>\u00a0<\/span><\/h2>\n

A good credit\u00a0utilization\u00a0ratio for both businesses and consumers\u00a0is\u00a0under\u00a030%. When you go above this,\u00a0it could mean\u00a0you\u2019re\u00a0not good with\u00a0your\u00a0finances or that you\u00a0owe too much\u00a0to a financial institution, making you less\u00a0<\/span>creditworthy<\/span><\/a>. A score of 100% means\u00a0you\u2019ve\u00a0maxed out all available credit. You want to keep track of your credit\u00a0utilization\u00a0to avoid\u00a0maxing out\u00a0your credit limit.<\/span>\u00a0<\/span><\/p>\n

When your CUR is too high,\u00a0you\u2019ll\u00a0likely\u00a0be\u00a0rejected for\u00a0financing\u00a0like\u00a0<\/span>small business loans<\/span><\/a>\u00a0and forms of revolving credit like a business credit card. If you do get approved but have a high CUR, you may get worse terms like a higher interest rate,\u00a0or\u00a0you may\u00a0need to put more collateral down\u00a0compared to\u00a0someone with a lower\u00a0credit\u00a0utilization\u00a0ratio. The lending company wants to know you have the money and\u00a0financial responsibility\u00a0to be able to make payments. High CURs\u00a0indicate\u00a0the opposite\u00a0for\u00a0both.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

But\u00a0don\u2019t\u00a0panic if your CUR is high. There\u00a0are ways\u00a0to lower your\u00a0utilization\u00a0so\u00a0that\u00a0you\u00a0can\u00a0build\u00a0the lender\u2019s\u00a0confidence.<\/span>\u00a0<\/span><\/p>\n

How to Lower Your Credit Utilization Ratio<\/span>\u00a0<\/span><\/h2>\n

To lower your CUR, do the following:<\/span>\u00a0<\/span><\/p>\n