Keeping your credit utilization under control will be a defining factor for a good credit score, so it is important to know how to calculate your credit utilization rate so that it does not exceed 30%. Why is 30% the limit percentage? If you surpass the 30%, the lenders consider that it is very likely that you will reach a point where you cannot meet your responsibilities. Experts suggest keeping the credit utilization rate below 30%, although the ideal would be below 10%.
Here we will teach you how to calculate the utilization rate of your credit and we will give you some tips to maintain a good credit score:
• The first thing to take into account is the punctuality with which you pay your responsibilities, this is one of the factors that is evaluated for the rating.
• Second, perform the calculation of the use of your credit to know the percentage that you have currently consumed, for this, identify the balances you owe on all your cards, this figure divide by the total credit limit and then multiply it by one hundred, the result will be the percentage. For example:
Credit debt balance: $ 7,000.00 usd
Total credit limit: $ 12,000.00 usd
$ 7,000.00 divided by $ 12,000.00 is 0.58 Multiplied by 100 is 58%
In this case, 58% is a very high percentage that would affect your credit score, so below are tips to discover how to lower this percentage:
• Pay your minimun amount requested more than once per month, that is, make additional payments to the minimun monthly payment requested by the lender.
• Request the creditor to increase your credit limit, this will help you with the credit utilization percentage rate previously expalined.
• Avoid closing credit cards to maintain credit utilization and account history, especially high credit limit cards or with long account history.
• Use credit cards that have virtual branches, this will make it easier for you to make payments on time, likewise you can see your balances online, payment dates and see the balance in real time after making additional payments.
• Request creditors to send your current balance via text message or email.
