New Delhi | January 3, 2026: Most cardholders believe that a credit score depends entirely on whether they have paid their credit card bills or EMIs on time. While timely repayment is crucial, it is not the only factor that matters. There is one less-visible but highly influential number that can quietly pull your CIBIL score down—the credit utilisation ratio.
According to financial experts, in many cases this ratio turns out to be the single biggest reason behind a falling score, even when payments are made on time.
What is the credit utilisation ratio?
The credit utilisation ratio indicates how much credit you are using compared to your total available credit limit. For instance, if the combined limit across all your credit cards is ₹3 lakh and you spend ₹90,000, your utilisation ratio is 30%. But if spending rises to ₹2.25 lakh, the ratio jumps to 75%—a level widely considered harmful for your credit score.
Banks and credit bureaus interpret high utilisation as a sign that the customer is becoming overly dependent on credit.
Why does it impact the score so quickly?
Payment history builds gradually over time. Credit utilisation, however, can change within a single billing cycle. If, in a particular month, you end up using 80–90% of your card limit, your score may fall even if you clear the entire bill on time.
According to the Future Crime Research Foundation (FCRF), rising digital spending and the belief that “paying the bill is enough” often cause consumers to overlook this critical metric. FCRF warns that a low credit score can later lead to loan rejections, higher interest rates, and even an elevated fraud risk profile in financial systems.
How much utilisation is considered safe?
Credit and banking experts advise keeping overall credit usage below 30% of the total available limit. If you are planning to apply for a home loan, car loan or personal loan, it is better to restrict utilisation to 10–15% for a few months. This not only stabilises your score but also presents a stronger credit profile to lenders.
Simple ways to keep utilisation low
- Spread your spending: If you have more than one credit card, avoid loading all expenses onto a single card. Distributing spending evenly helps prevent excessive utilisation on any one card.
- Request a higher credit limit: If your income and transaction history are strong, ask your bank for a credit limit enhancement. A higher limit automatically lowers your utilisation ratio—without cutting back on spending.
- Don’t close old cards: Many users close older cards they no longer use. Doing so reduces your total available credit, which can suddenly increase utilisation and negatively affect your score.
A small number with a big impact
Financial planners point out that credit utilisation is a factor that looks small but carries outsized influence. In today’s digital credit ecosystem, tracking this ratio is just as important as paying bills on time. Its clear: if you want your CIBIL score to remain stable and strong, timely repayment alone is not enough. How much you spend matters just as much as when you pay.
