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Credit Utilisation Ratio

Credit Utilisation Ratio is the percentage of your total available credit limit that you currently use across your revolving credit accounts, such as credit cards.

Posted: Aug 10, 2026

Updated: 28 Aug 2026

Written by: Kissht

Reading time: 3 mins

What is a Credit Utilisation Ratio?

A Credit Utilisation Ratio measures how much of your available revolving credit you use at a given time. Lenders and credit bureaus use this ratio as an important indicator of your credit management habits.

The ratio compares your outstanding credit card balances with your total approved credit limit. For example, if your credit limit is Rs. 1,00,000 and your outstanding balance is Rs. 25,000, your credit utilisation ratio is 25%.

A lower credit utilisation ratio usually indicates responsible credit usage because it shows that you do not rely heavily on your available credit. A consistently high ratio may suggest higher credit dependency, which can affect your credit score. Thus, it is generally recommended to maintain a credit utilisation ratio below 30%.

Credit Utilisation Ratio = (Total Outstanding Debt ÷ Total Credit Limit) × 100

Credit Utilisation Ratio Range

Range	Credit Usage
Below 10%	Excellent
10% - 30%	Good / Ideal
31% - 50%	Moderate
51% - 75%	High
Above 75%	Very High

Factors That Affect Credit Utilisation Ratio

Total credit limit
Outstanding credit card balance
Multiple active credit cards
Credit limit increase
Large purchases
Billing cycle timing

Tips to Reduce Credit Utilisation Ratio

Pay credit card bills before the due date
Make multiple payments each month
Request a higher credit limit
Spread expenses across multiple cards
Keep old credit cards active
Avoid unnecessary purchases

Credit Utilisation Ratio: Myths vs Facts

Myths	Facts
A 0% credit utilisation ratio always leads to the highest credit score.	Responsible and regular credit card usage below 30% demonstrates that you actively and safely manage your available credit.
Credit utilisation ratio applies to all types of loans.	The credit utilisation ratio only applies to revolving credit accounts, such as credit cards and lines of credit. It does not apply to fixed installment loans.
A higher credit limit always increases your debt.	A higher credit limit only increases your available borrowing capacity. Your actual debt depends entirely on your spending and repayment habits.

FAQs

Credit Utilisation Ratio is the percentage of your total available credit limit that you currently use across your revolving credit accounts, such as credit cards.

What is a good credit utilisation ratio?

A credit utilisation ratio below 30% is generally considered good. Many financial experts recommend keeping it below 10% for the best credit profile.

Is 40% credit utilisation bad?

A 40% credit utilisation ratio is higher than the commonly recommended level. It may affect your credit score if it remains high over time.

Can I have a 0% credit utilisation ratio?

Yes. A 0% credit utilisation ratio means you do not use your available revolving credit. However, a 0% ratio is not ideal because it does not help improve your credit score and can make you look inactive to lenders.