Updated: December 8, 2025 Don’t Max Out! : Mastering the Art of Low Credit Utilisation
Overview
When you start managing credit, you quickly learn that your repayment habits are important. However, there is one factor that holds immense power over your score that is often overlooked: the Credit Utilisation Ratio. This simple percentage tells lenders how much of your available credit limit you are actually using, and it is the key to signaling financial control.
The All-Important 30% Threshold
The Credit Utilisation Ratio is calculated by dividing your total outstanding debt by your total credit limit. For example, owing ₹30,000 against a ₹1,00,000 limit gives you a 30% ratio. Experts agree that the best credit utilisation ratio is below 30%. If your usage creeps higher, it signals financial stress and over-reliance on credit, which actively hurts your credit score. Keeping it low shows financial discipline and makes you a much more attractive borrower.
Simple Habits to Keep Your Ratio Low
The great thing about the utilisation ratio is that you can control it relatively quickly. Here is how to keep the percentage in the healthy zone:
- Pay Down Early and Often: Do not wait for the monthly due date. Make multiple small payments throughout the month or even pay off purchases the same day you make them. This ensures the low balance is reported to the credit bureau, immediately improving your ratio.
- Decrease Your Spending: The most effective method is simply to reduce the amount you charge to your cards. If you typically spend 70% of your limit, cutting that down to 25% instantly transforms your risk profile from high to responsible.
- Request a Limit Increase: If you have stable income and a decent repayment history, ask your bank for a higher credit limit. If your limit doubles while your spending stays the same, your utilisation ratio drops instantly, without you having to pay down any extra debt.
- Distribute Expenses: Avoid relying on a single card. By splitting your expenses across multiple cards, you prevent any one account from becoming “maxed out,” keeping the utilisation low across your entire profile.
- Keep Old Accounts Open: Never close an old credit card account, even if you do not use it. Closing an account reduces your total available credit limit, which automatically causes your utilisation ratio to spike, even if your outstanding debt has not changed.
Conclusion
By keeping your utilisation low, you signal discipline, improve your score, and set yourself up for better loan approvals and lower interest rates. Your credit utilization is entirely within your control. Stay below the 30% line, and you will consistently look like a responsible borrower ready for any financial opportunity.
