# Debt-to-Limit Ratio Calculator

Debt to Limit Ratio:

## About Debt-to-Limit Ratio Calculator (Formula)

The debt-to-limit ratio is a financial metric that calculates the amount of debt a person has in relation to the total credit limit of their credit cards. It is an important indicator of a person’s credit risk and can impact their credit score.

The formula for the debt-to-limit ratio is as follows:

Debt-to-Limit = Total Credit Card Balance ÷ Total Credit Card Limit

The total credit card balance is the sum of the balances of all the credit cards a person has. The total credit card limit is the sum of the credit limits of all the credit cards a person has. The result of the debt-to-limit ratio is expressed as a decimal or a percentage.

A debt-to-limit ratio of less than 30% is generally considered good, while a ratio of 30% or more is considered high and can have a negative impact on a person’s credit score. Lenders look at this ratio as an indicator of how much a person is using their available credit, which can affect their ability to pay back debts. If a person has a high debt-to-limit ratio, it means they are using a large portion of their available credit, which can make lenders view them as a higher risk.

It is important to keep the debt-to-limit ratio low in order to maintain a good credit score and be considered a low-risk borrower by lenders. To do this, a person can either pay off their debts or increase their credit limits. By using a debt-to-limit ratio calculator, a person can easily calculate their debt-to-limit ratio and take steps to improve it if necessary.