## Debt to Limit Ratio Result:

The Debt-to-Limit Ratio, also known as the Credit Utilization Ratio, is a financial metric that assesses your credit card usage in relation to your credit card limits. It’s an important factor that credit bureaus and lenders consider when evaluating your creditworthiness.

**How the Debt to Limit Ratio Calculator Works:**

**Input:**The calculator takes two inputs:**Total Debt:**This is the total amount you owe on your credit cards.**Total Credit Limit:**This is the combined credit limit across all your credit cards.

**Calculation:**The calculator divides your total debt by your total credit limit to determine the Debt-to-Limit Ratio.**Result:**The result is displayed as a percentage.

**Formula for Debt-to-Limit Ratio:**

The formula for calculating the Debt-to-Limit Ratio is:

Debt-to-Limit Ratio=(Total DebtTotal Credit Limit)×100Debt-to-Limit Ratio=(Total Credit LimitTotal Debt)×100

Here’s how it works:

- If you have a total debt of $2,000 and a total credit limit of $10,000, your Debt-to-Limit Ratio would be:Debt-to-Limit Ratio=(2,00010,000)×100=20%Debt-to-Limit Ratio=(10,0002,000)×100=20%In this case, your Debt-to-Limit Ratio is 20%, which means you are using 20% of your available credit.

**Why is the Debt-to-Limit Ratio Important:**

**Creditworthiness:**

Lenders and credit card companies use this ratio to evaluate your creditworthiness. A lower ratio (closer to 0%) is generally better because it indicates that you are not using a large portion of your available credit.

**Credit Score:**

Your Debt-to-Limit Ratio is a significant factor in determining your credit score. High ratios can negatively impact your credit score, making it harder to obtain new credit or get favorable terms on loans.

**Financial Health:**

Monitoring your Debt-to-Limit Ratio can also help you assess your financial health and manage your credit responsibly. Keeping your ratio low is a good financial practice.

**Interest Costs:**

High ratios can lead to higher interest costs because you are carrying a larger balance. Paying down your debt to lower this ratio can save you money on interest charges.

In summary, the Debt-to-Limit Ratio is a crucial financial metric that reflects your credit card usage. Maintaining a low ratio, ideally below 30%, is generally recommended for better financial health and creditworthiness.