Credit
Utilization Ratio
pronounced: [U-t-i-l-i-z-a-t-i-o-n- -R-a-t-i-o]
The percentage of available credit limit being used on credit cards.
Credit bureaus recommend keeping the utilization ratio below 30% to maintain a healthy credit score and improve loan approval chances.
Key Facts
| Fact | Value |
|---|---|
| Interest Rate | 30% p.a. |
Example
Ravi applies for a home loan. His CIBIL score is 720 — considered "fair". With a score above 750, he would get a loan at 8.5% p.a. Instead, the bank offers 9% p.a. A 20-year ₹50 lakh loan at 9% costs ₹44,986/month vs ₹40,680/month at 8.5% — ₹4,306 more every month.
Frequently Asked Questions
Related Terms
Last updated: 21 May 2026