Utilization max score??

[Anonymous]

I hope I am asking in the right place.  I am new, first posting, and this is a bit confusing, so apologies where appropriate.  My question is how do you determine overall utilization.  I know individual utilization is simply balance divided by credit limit to get a percentage.  BUT, for overall utilization I am a bit confused.  As an example, do you count credit cards without a balance?  I have 8 cards, 2 with zero balances.  Do I divide the total of the individual utilizations by 8 or by 6?   Thanks in advance for any help you can provide.

[Anonymous]

Add up all of your 8 balances, divide by the total combined limits of those 8 cards and you arrive at aggregate (overall) utilization.

If this number is a decimal, which it almost always is, you round up to the nearest whole number.  So 24.34% would be viewed as 25% utilization for scoring purposes.  Overall utilization if calculated to 0.41% would be scored as 1% utilization.  Hopefully that makes sense.

If you have any other questions feel free to ask!

[Anonymous]

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@Anonymous wrote:

I hope I am asking in the right place.  I am new, first posting, and this is a bit confusing, so apologies where appropriate.  My question is how do you determine overall utilization.  I know individual utilization is simply balance divided by credit limit to get a percentage.  BUT, for overall utilization I am a bit confused.  As an example, do you count credit cards without a balance?  I have 8 cards, 2 with zero balances.  Do I divide the total of the individual utilizations by 8 or by 6?   Thanks in advance for any help you can provide.

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You aren't dividing any number by 6 or by 8.   As in X / 6 or X / 8. 

As BBS explains  you are first adding up all your debt across all 8 open cards.  That will give you some dollar number, like $2135 for example.  Then you add up all eight credit limits.  That will also give you some dollar number, like $10,000 (if the limits were six cards with a CL of $1000 each and two cards with a CL of $2000 each).  Then you would divide the first number (debt) by the second number (total CL).  In the example above, your total util would be 21.35%, rounded up to 22%.

Individual util is simpler: the debt on that card divided by that card's credit limit.

[Anonymous]

BrutalBodyShots,

Thank you for the response.  My late response was due to getting lost from my sign in and trying to find it without re-registering.  As you can see, I am just fumbling right now.  I am in hte process of rebuilding and trying to understand the ins and outs.  I appreciate your help; you see I was off target.  Thanks, again.

[Anonymous]

CreditGuyin Dixie,

Your explanation made perfect, logical sense.  Thank you so much for helping me.  I was so off target, and my utilization is higher than I thought, so I know my charge now.  Get the utilization down, get the balances down and move some accounts to zero.  I can do that.  It might take a minute, but certainly not something I can't  make happen with a little personal discipline.

[Anonymous]

Very welcome, NNO!  A reasonable prioritization strategy when you have a lot of CC debt is this:

(1)  First work on paying down all cards < 47%.  In theory 48.99% is ok, but since you are paying interest, it's better to pay a bit more.

(2)  Then try to pay off any cards with fairly small balances, creating as many $0 balance cards as you can.

(3)  Then pay all remianing cards down to < 27%.

(4)  Finally work on paying off all CC debt altogether.  When you finally do that, continue to use at least one card but always pay your cards in full.

That's a strategy that is based purely on helping your credit score.  If you have some cards that have a much MUCH higher interest rate than others, then I'd give those cards the greater emphasis.