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

From first credit card which has a credit limit of $1000, you have utilized $410. It means you have consumed

410/1000 =0.41*100= 41% of first card

From second card which has a limit of $1000, you have consumed $510. It means you have utilized

510/1000= 0.51*100= 51% of second card

Overall utilization can be calculated as following:

(46% + 51% )/2= 46%

Answer 2

You are using $410 + $510 = $920 out of a possible $1000 + $1000 = $2000

Therefore your credit utilization is
`(920)/(2000) =.46`

That is, 46%