Understanding how to keep credit utilisation low is essential for maintaining a healthy credit score, improving loan eligibility, and strengthening your overall financial profile.
Last updated on: January 16, 2026
Maintaining a healthy borrowing profile begins with keeping your credit utilisation ratio under control. Lenders and credit bureaus closely assess how much of your available credit you use, and excessive utilisation may signal financial stress. Understanding how to keep credit utilisation low is an important habit that supports long-term financial wellbeing, improves your eligibility for loans and credit cards, and helps you secure better interest rates.
Keep your utilisation under 30% for a strong and responsible credit history.
A low ratio shows disciplined spending and boosts approval chances for loans.
High utilisation reduces your score and signals repayment risk.
Credit utilisation influences personal loan interest rates, credit card upgrades, and borrowing capacity.
Your credit utilisation ratio refers to the percentage of your available credit limit that you actually use. It is calculated on revolving credit lines such as credit cards and is cumulative, not card-specific. This means lenders look at the combined usage of all cards, not each card individually.
A good credit utilisation ratio is typically below 30%, as lenders view low utilisation as a sign of responsible credit behaviour. Maintaining a consistently low credit utilisation ratio supports a stronger credit score and signals financial stability to banks, NBFCs, and future lenders.
To maintain a low credit utilisation ratio consistently, you must adopt a mix of spending discipline, limit management, and timely repayment.
Reducing discretionary expenses is one of the easiest ways to bring utilisation under control. Avoid unnecessary purchases, especially towards the end of the billing cycle, when utilisation tends to spike.
Requesting a higher credit limit can automatically lower your utilisation ratio, provided your spending habits remain unchanged. Do this through your card issuer’s app or customer service channels. A higher limit improves your credit utilisation ratio, as long as you do not overspend.
Monitor your credit card statements, app notifications, and SMS alerts to ensure your usage does not exceed 30%. Staying aware of your spending helps you stay disciplined throughout the month.
Clearing dues before the billing cycle ends helps decrease your utilisation ratio instantly. Making multiple smaller payments during the month, instead of one full payment, can also keep utilisation low.
If you have more than one credit card, divide purchases between them to avoid maxing out a single card. This strategy maintains healthier utilisation levels across all accounts.
Most credit card apps allow you to set limits for individual transactions or monthly budgets. Enforcing these can help stop excessive utilisation.
Older cards typically have higher limits. Closing them reduces your total available credit, which increases utilisation even if your spending remains unchanged.
Improves credit score: Lower utilisation contributes positively to your overall score.
Boosts loan eligibility: A strong score increases your chances of approval for personal loans, home loans, and credit cards.
Better interest rates: Low-risk borrowers often receive more competitive rates and offers.
Strengthens your repayment credibility: Lenders view low utilisation as responsible credit behaviour.
Protects against over-borrowing: Helps maintain financial discipline and prevents debt accumulation.
To determine your utilisation, use this formula:
Credit Utilisation Ratio = (Total Credit Used ÷ Total Available Credit Limit) × 100
If your total credit limit across cards is ₹1,00,000 and you have used ₹25,000, then:
(₹25,000 ÷ ₹1,00,000) × 100 = 25%
This means your utilisation is 25%, which falls within the recommended bracket.
Reviewer
A good ratio is typically below 30% of your total available credit limit, which is favourable for your credit score.
Credit utilisation contributes significantly to your score. High utilisation can lower it, while a low ratio strengthens your profile.
No, having no credit utilisation may not be ideal as it denotes no credit activity. Very low or zero utilisation may not build credit history effectively. In turn, your credit utilisation can be too low, making it harder to demonstrate responsible repayment behaviour. Zero utilisation can also lead to the closure of your credit account.
You can spend less, increase your limit, repay balances early, distribute expenses across cards, and monitor your credit usage regularly to improve your credit utilisation.