How does utilization affect credit score?

Credit utilization significantly impacts your credit score as it represents the ratio of your outstanding credit card balances to your total available credit limits. In India, credit bureaus like CIBIL consider this a key factor in risk assessment.

• Lower utilization (ideally below 30%) indicates responsible credit management and helps improve your credit score.
• High utilization suggests financial dependency or overextension, which can lower your score.
• Maintaining a low ratio signals to lenders that you are a low-risk borrower, facilitating easier loan approvals.