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How to Improve Credit Utilisation Ratio?

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April 20, 2023


What’s Inside

Understanding the credit card utilisation limit is crucial when it comes to using credit cards. It helps you to know the availability of your remaining credit, and by extension the funds available to you. It is also one key factor that helps improve your credit score.

Your credit utilisation ratio or rate is the spent revolving credit divided by the total available revolving credit. Simply put, it is the ratio between your spent amount or total debt and your total available credit limit.

For instance, if a card user has a credit limit of ₹50000, and has spent ₹15000 already, then the current credit utilisation ratio is (15000/50000) x 100=30%.

Using this method, you can measure your total credit utilisation ratio or per-card ratio. Improving the ratio can increase the credit score, allowing card users to get loans at lower interest rates and easier approvals.

Ways to Optimise Your Credit Card Utilisation Limit

Learning how to improve the credit utilisation ratio can benefit anyone using or planning to use a credit card. As it directly affects your credit score, users can increase their creditworthiness in front of lending institutions.

Here is everything you need to know to improve your credit utilisation credit score to benefit your creditworthiness.

Understanding the Credit Utilisation Credit Score scale

Credit scores usually range between 300 to 900. A score above 700 is typically a good score, while achieving an 800+ credit score can get you perks like pre-approved credit cards with better rewards.

The ideal credit utilisation credit score is 30% or below. This means restricting the credit card utilisation limit to 30% or less of your total permissible credit limit will improve your credit utilisation ratio.

Paying Off the Debt on the Same Day

One of the keys to optimising your credit card utilisation limit is to never wait till the due date to pay off your debt. Often, users keep swiping their cards for cash back and other rewards when shopping to accumulate even greater rewards.

But paying off the expenses on the same day or the day after can be a smart spending tactic. It helps reduce your overall credit card utilisation limit while letting you earn more rewards without worry.

Multiple Payments within the Same Billing Cycle

You can take advantage of your credit account balance being reported at the end of the billing cycle. So, making several payments using credit cards in the same month can improve your credit utilisation ratio.

For example, salaried individuals can immediately pay off some of their remaining card balance when their salary arrives. Paying the bills early with this method reduces the ratio before the balance is reported.

Increase Your Credit Limit

Of course, increasing the overall card limit is the simplest way to improve your credit utilisation ratio. The credit card company may offer this facility if you have never defaulted on your credit card payments and have a relatively moderate to low utilisation rate.

Users can also request the company to increase their credit limit. Increasing the available credit automatically optimises the credit card utilisation limit without curbing your expenses.


Credit utilisation limit is important as it impacts your credit score and shows your ability to manage credit responsibly.

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Frequently Asked Questions

1. How can I reduce my utilisation rate?

You can make early payments on your credit card debt to reduce your utilisation rate. Keeping the total spending within 30% of the credit limit is also a good strategy.

2. What is a good ratio for credit utilisation?

Ideally, spending 30% or less of the total available credit limit is the best ratio for credit utilisation.

Learn more about getting your first credit card here: https://www.youtube.com/shorts/rTdsmKpDlEQ


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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