Credit Utilization
pronounced: [C-r-e-d-i-t- -U-t-i-l-i-z-a-t-i-o-n]
Credit Utilization is the percentage of your total credit card limit that you have used at any point in time.
It is calculated as total outstanding balances divided by the sum of all credit limits, multiplied by 100. A utilization above 30% is viewed negatively by lenders and can lower your CIBIL score significantly. The healthiest range is 10% to 20%, and paying the full outstanding balance before the statement date is the best way to keep it low.
Key Facts
| Fact | Value |
|---|---|
| Interest Rate | 30% p.a. |
Example
Ravi applies for a home loan. His CIBIL score is 720 — considered "fair". With a score above 750, he would get a loan at 8.5% p.a. Instead, the bank offers 9% p.a. A 20-year ₹50 lakh loan at 9% costs ₹44,986/month vs ₹40,680/month at 8.5% — ₹4,306 more every month.
Frequently Asked Questions
Related Terms
Last updated: 2 June 2026