Credit utilization
Utilization ratio · Credit utilization ratioCredit utilization is the share of a credit limit in use: the balance on a credit card divided by the card's limit, as a percent. Across several cards, it is the total of the balances divided by the total of the limits.
What is credit utilization?
A card with a $2,000 balance on an $8,000 limit is at 25% utilization. The part of the limit not in use, $6,000 on that card, is its available credit. Utilization and available credit are two readings of the same two numbers.
The combined figure is not the average of the cards' own percents. It adds the balances and the limits first and then divides, so a card with a large limit weighs more than a card with a small one. In the example below, the cards sit at 25% and 60%, which average 42.5%, while the combined ratio is 32%.
The ratio moves without any spending. At the same balance, a higher limit lowers it and a lower limit raises it.
How credit utilization works, with numbers
Two cards: one with a $2,000 balance on an $8,000 limit (25%), and one with a $1,200 balance on a $2,000 limit (60%). Together they carry $3,200 against $10,000 of limits, a combined utilization of 32%, with $6,800 of available credit.
- Balances, $2,000 + $1,200
- $3,200
- Limits, $8,000 + $2,000
- ÷ $10,000
- Credit utilization
- 32%
Why credit utilization matters
Utilization is balance per dollar of limit, so it moves with each charge, each payment and any change to a limit. In the example, paying off the second card's $1,200 takes the combined figure from 32% to 20%. Raising the first card's limit by $2,000, with no payment, takes it to 26.7%.
A payment or a charge moves available credit the other way by the same dollars: the $1,200 payoff lifts it from $6,800 to $8,000.
Credit utilization in Taiga Finance
Once a debt is tracked on the Debt page or a mortgage is in the payoff plan, and a credit card account has a limit on file, the rail there shows a “Credit lines” block with “Available credit” and “Utilization”. Utilization there is the cards' total balance divided by their total limit, and hovering it lists each card's own percent, with a footnote counting the credit accounts it covers.
The limit is the “Limit” field in a card account's details. With a limit on file and a balance, the card's account drawer shows a “Utilization” bar with the percent, the balance and the limit. The combined figure covers the cards with a limit on file, and its footnote counts them.
Debts, in the help center →Key takeaways: Credit utilization
- Credit utilization is a card's balance divided by its credit limit.
- Across several cards it is the total balance over the total limit, which differs from the average of the cards' own percents.
- A payment or a higher limit lowers it; a charge or a lower limit raises it.
- For a card with a limit on file, Taiga Finance shows its utilization in its account drawer, and on its Accounts row when it carries a balance.
Questions about Credit utilization
What is credit utilization?
The share of a credit limit in use: a card's balance divided by its limit. A $2,000 balance on an $8,000 limit is 25%.
How is credit utilization calculated across several cards?
The balances are added, the limits are added, and the first total is divided by the second. Cards at $2,000 of $8,000 and $1,200 of $2,000 come to $3,200 of $10,000, or 32%, not the 42.5% average of their own percents.
Does Taiga Finance show my credit utilization?
Yes, for credit cards with a limit on file. A card carrying a balance shows its own percent of its limit on its Accounts row, and its account drawer has a Utilization bar.