How much of your credit card should you use to increase credit score?

Credit Card Utilization Ratio: How Much of Your Credit Limit Should You Use for a Better Credit Score?

Your credit utilization ratio (CUR) is a key factor in determining your credit score. It measures the amount of credit you’re using compared to your available credit limit. A high CUR can indicate that you’re overextending yourself financially, which can hurt your credit score.

What is a Good Credit Utilization Ratio?

The ideal CUR for building a strong credit history is around 10%. This means that you should only be using about 10% of your available credit limit at any given time.

How to Calculate Your Credit Utilization Ratio

To calculate your CUR, simply divide your total credit card balances by your total credit limit. For example, if you have a total credit card balance of $1,000 and a total credit limit of $10,000, your CUR would be 10%.

How to Improve Your Credit Utilization Ratio

If your CUR is too high, there are a few things you can do to improve it:

• Pay down your credit card balances. The best way to reduce your CUR is to pay down your credit card balances. If you can, try to pay off your balances in full each month.
• Request a credit limit increase. If you have a low credit limit, you can request a credit limit increase from your credit card issuer. This will give you more available credit and lower your CUR.
• Avoid using multiple credit cards. If you have multiple credit cards, try to consolidate them onto one or two cards with lower interest rates and higher credit limits. This will make it easier to manage your debt and lower your CUR.

The Impact of Credit Utilization Ratio on Your Credit Score

Your CUR has a significant impact on your credit score. A high CUR can lower your score, while a low CUR can help you to improve your score.

According to FICO, the company that developed the most widely used credit scoring model, your CUR accounts for about 30% of your credit score. This makes it the second most important factor in your credit score, after your payment history.

Keeping Your Credit Utilization Ratio Low

Maintaining a low CUR is essential for building a strong credit history. By following the tips above, you can keep your CUR low and improve your credit score.