Question

Suppose you have two credit cards. The first has a balance of $410 and a credit limit of $1,000. The second has a balance of $510 and a credit limit of $1,000. What is your overall credit utilization?

Answer 1

The overall credit utilization is 42%.

Step-by-step explanation:

The card utilization is the credit in the card divided by the card limit and multiplied by the 100.

It is measured in the percentage.

Card utilization = credit in card/card limit *100

So the total credit in both cards = $510 + $410 = $920

Credit limit of both cards = $1000 + $1000 = $2000

By putting values in the formula:

Card utilization = $920/$2000 * 100 = 42 percent.

Hence the overall credit utilization is 42%.

Answer 2

Your overall credit utilization is 46 percent. This number is arrived at by adding the total amount of debt ($920) by the total amount of available credit($2000). It represents the amount you owe compared to the amount you have available to spend. While credit utilization of 46 percent will probably not adversely affect your credit score, a better score can be attained by keeping your overall credit utilization below 30 percent.