Debt Utilization Ratio Calculator

Formula

To calculate the Debt Utilization Ratio ($R$):

\[ R = \left( \frac{D}{C} \right) \times 100 \]

Where:

$R$ is the Debt Utilization Ratio (%)
$D$ is the Total Debt ($)
$C$ is the Total Credit Limit ($)

What is a Debt Utilization Ratio?

The debt utilization ratio, also known as the credit utilization ratio, is a measure of the amount of credit you are using compared to the total credit available to you. It is an important factor in determining your credit score, as it indicates how well you are managing your credit. A lower debt utilization ratio generally suggests that you are using credit responsibly, while a higher ratio may indicate potential financial stress or over-reliance on credit.

Example Calculation 1

Let's assume the following values:

Total Debt ($D$) = $5,000
Total Credit Limit ($C$) = $20,000

Using the formula:

\[ R = \left( \frac{5,000}{20,000} \right) \times 100 = 25 \]

The Debt Utilization Ratio is 25%.

Example Calculation 2

Let's assume the following values:

Total Debt ($D$) = $3,000
Total Credit Limit ($C$) = $15,000

Using the formula:

\[ R = \left( \frac{3,000}{15,000} \right) \times 100 = 20 \]

The Debt Utilization Ratio is 20%.