Credit Utilisation Ratio
The share of your available credit limit that you are currently using.
Keeping reported utilisation under about 30% supports the score. Because bureaus see the statement-date balance, paying before the statement generates helps even if you never revolve a balance.
Why Credit Utilisation Ratio matters when comparing products
The Credit Utilisation Ratio is a significant factor considered by lenders in India when evaluating loan or credit card applications. A lower ratio often indicates responsible credit management, potentially leading to more favourable interest rates and higher credit limits when comparing financial products. It reflects an individual's ability to manage debt effectively, influencing their perceived creditworthiness.
Illustrative example
If a credit card has a limit of ₹1,00,000 and the outstanding balance is ₹20,000, the Credit Utilisation Ratio is 20% (₹20,000 / ₹1,00,000). If the balance was ₹50,000, the ratio would be 50%. Lower ratios are generally viewed positively by credit bureaus.