Credit Utilization Pct Question

This should be pretty straightforward, but I haven’t found the answer anywhere.

One component of your credit score is your credit utilization percentage. In short, if you only use 10% of your available revolving credit, you’re in better shape (vis a vis your credit score) than if you use 80%.

My question, however, concerns cards that were canceled. For example, suppose I have three cards each with a $1000 limit.

Card A has a balance of $100. Card B has a balance of $400 and card C has a balance of $1000. Altogether, that comes to $1500, making my credit utilization rate 50% ($1500/$3000). Suppose now card C decides to cancel my card. Do I now have a credit limit of $0 for this card (making my utilization rate 75%) or does it still compute at whatever the credit limit is for that card.

If the former is true, and card B then cancels, does my credit utilization rate go up to 150%? ($1500/$1000)?

Zev Steinhardt

It is literally as simple as (credit used) / (credit available)

When a card is closed, it is eliminated from the calculation, but in the examples you give, there are still balances when the closure occurs. A remaining balance means that there’s still a credit limit equal to the balance.

So when the card with $100 balance closes, the credit available goes down by $900. Your calculation would be 1500/2100.

When the card at $1000 utilization is closed, there’s no change in your ratio until you pay it off.