How to Figure Out Debt-to-Credit Ratio

High debt-to-credit ratios can dock your credit score.
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One of the factors used in figuring your credit score is the amount of money that you owe. It's a big one, accounting for 30 percent of your score. Within the category, the credit scoring formula looks at your debt-to-credit ratio, also known as your credit utilization, which measures how much of your available credit you're currently using. For example, while $5,000 might be a lot of debt for someone who only has $6,000 of available credit, it's not much when that person could tap into $100,000 of credit limits across all her cards.

Step 1

Add all of your credit card balances to figure your total credit card debt. For example, if you owe $400 on Credit Card A, $1,600 on Credit Card B and $0 on Credit Card C, your total debt is $2,000.

Step 2

Add your maximum credit lines for each credit card to figure your total credit amount. Include the limits for all your credit cards, even if you don't currently have a balance on them. Continuing the example, if your credit limit is $1,500 on Credit Card A, $4,000 on Credit Card B and $2,500 on Credit Card C, your total credit limit is $8,000.

Step 3

Divide your total debt by your total credit limit to figure your debt-to-credit ratio. In this example, divide $2,000 by $8,000 to find that your debt-to-credit ratio is 0.25, or 25 percent.

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