How much credit utilisation is good and will help improve my credit score?

Posted on Tuesday, January 30th, 2024 | By IndusInd Bank

Embarking on the journey to understand credit utilisation opens doors to a world where managing your finances wisely becomes a powerful tool for shaping a robust credit score. In this blog, we’ll unravel the meaning behind an ideal credit utilization ratio, offering you insights into how this metric can significantly influence your creditworthiness. Read this blog to make informed decisions, which contribute to a more secure and prosperous financial future. So, join us as we simplify the complexities of responsible credit utilization, revealing how it can be a key player in elevating your financial standing.

Defining Credit Utilisation

Credit utilisation is calculated based on the ratio of your credit card balances to your credit limits. It’s a crucial factor in calculating your credit score and plays a significant role in shaping lenders’ perceptions of your creditworthiness. A lower credit utilization ratio is generally considered favourable.

• The Ideal Credit Utilization Ratio

As a rule of thumb, experts recommend maintaining a credit utilization ratio below 30%. This means that if you have a credit limit of ₹10,000, keeping your outstanding amount below ₹3,000 is advisable. Striking a balance between utilizing credit responsibly and not maxing out your cards is key to building and maintaining a positive credit history.

• Impact on Credit Score

Credit utilisation accounts for a substantial portion of your credit score. High credit utilisation can signal financial stress to lenders, potentially leading to a lower credit score. Conversely, a lower credit utilization ratio reflects responsible credit management, positively impacting your credit score.

• Stay Informed and Proactive

Regularly monitor your credit card statements and keep track of your credit utilization. Staying informed allows you to make proactive adjustments to your spending habits, ensuring that you maintain a healthy credit utilization ratio over time.

Utilizing IndusInd Bank’s Credit Cards Responsibly

IndusInd Bank’s credit cards are crafted with features that encourage responsible credit utilization. With flexible credit limits and tailored benefits, these cards empower users to manage their finances wisely. Leveraging the unique offerings of IndusInd Bank’s credit cards can contribute to a positive credit profile.

1. 100% Digital Application & Instant Approval

One of the standout features of IndusInd Bank’s credit cards is the ability to avail a brand-new credit card in a matter of minutes. This ensures that cardholders have the flexibility to manage their credit utilization effectively, aligning with their unique spending patterns and lifestyle needs.

• Comprehensive Rewards Program

IndusInd Bank’s credit cards come with a comprehensive rewards program that incentivizes responsible spending. Earn never-expiring reward points on every transaction and enjoy the flexibility to redeem them anytime for a variety of benefits, adding value to your credit card experience without compromising your credit utilization ratio.

• Security Features

Security is a top priority, and IndusInd Bank Instant Credit Cards come equipped with advanced security features. From secure online transactions to real-time fraud alerts, these cards offer peace of mind, ensuring that your rent payments are not only convenient but also protected.

Conclusion

Mastering credit utilization is a strategic move towards building and improving your credit score. By adhering to responsible credit practices and leveraging the unique features of IndusInd Bank’s credit cards, you can navigate the credit landscape with confidence. IndusInd Bank’s commitment of providing a rewarding credit card experience aligns seamlessly with your goal of achieving optimal credit utilization and, in turn, a healthier financial future. Choose IndusInd Bank’s credit cards to not only enhance your financial flexibility but also embark on a journey towards a stronger credit profile.

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Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.