Question

suppose you have two credit cards. The first has a balance of $415 and a credit limit of $1,000. The second has a balance of $215 and a credit limit of $750. What is your overall credit utilization?

Answer 1

Overall Credit = 1000 + 750 = 1750

Overall Balance = 415 + 215 = 630

Overall Usage = 1750 - 630 = 1120

Overall %age Usage = (1120/1750) × 100

                                   = 64 %

Answer 2

Credit utilization formula is given by :

Credit utilization = (Total balances on all credit cards) / (Total credit limits on all credit cards)

Total credit balances = 415 + 215 = $ 630

Total credit limit = 1000 + 750 = 1750

Credit utilization = 630/1750 = 0.36

As a percentage :

0.36 × 100 = 36%