Credit utilisation
Short answer
Credit utilisation is the share of your credit limit you are using — the balance reported at statement date divided by your total limit. Under 30% is the widely used healthy zone, and utilisation carries roughly 30% weight in bureau scoring models.
What it means
Utilisation is a proxy for dependence on credit. Someone routinely using 80% of their limit looks stretched; someone using 20% looks comfortable — regardless of whether both pay in full.
The common mistake
Believing that paying in full is enough. It protects you from interest, not from a high reported ratio — because the number the bureau sees is usually your statement-date balance.
The other common mistake is closing an unused card, which removes its limit from the denominator and pushes your ratio up. See credit score myths.
Two ways to improve it quickly
- Pay mid-cycle. Make a payment before the statement generates so a smaller balance is reported.
- Raise the limit, not the spending. A higher limit lowers the ratio arithmetically — provided your spending stays where it was.
Related
All figures on this page are indicative and dated. Rates and fees differ by bank and change over time. Always verify with your bank's official schedule of charges.
Frequently asked questions
How is credit utilisation calculated?
Divide the balance reported to the bureau — usually your statement balance — by your total credit limit across cards, and express it as a percentage. Individual card utilisation can matter too, not just the overall figure.
Does paying in full keep my utilisation low?
Not necessarily. Bureaus generally see the statement-date balance, not the post-payment one. If you spend heavily in a cycle, utilisation can look high for that month even though you never pay a rupee of interest.
Sources
The regulation and official pages this page is checked against. If one of them disagrees with us, it wins.
- What is a CIBIL Score — TransUnion CIBIL
- FAQs — Understand Your Credit Score and Report — TransUnion CIBIL
Keep learning
Written and checked by the CardSamajh editorial desk · Last reviewed: · How we check this