Credit utilisation

Credit utilisation is the part of your card limit you have used, as a share of the total. Lower is generally better for your credit score, because heavy use suggests you lean on credit.

How it is worked out

Divide what you owe on your cards by your total limit. Spending ₹20,000 on a ₹1,00,000 limit is 20% utilisation. Bureaus look at it both per card and across all your cards together, and they read a high figure as a sign you may be stretched, which can weigh on your score. There is no official cutoff, but keeping usage comfortably below your limit is the usual guidance.

Why it moves your score

Along with paying on time, utilisation is one of the biggest things a credit bureau watches. Maxing a card out, even if you clear it later, can show up as high utilisation on the day the bank reports to the bureau, and temporarily dent your score.

How to keep it low

Two simple levers help. First, pay the balance down before the statement date, not just by the due date, so a lower figure gets reported. Second, a higher limit lowers your utilisation for the same spending, which is one reason a credit limit increase can help your score, as long as you do not spend more because of it. Paying the total amount due in full each month keeps both your interest and your utilisation in check.