7 years, 4 months ago

Credit limit: Is it wise to use it to the fullest?

Credit limit: Is it wise to use it to the fullest? They say that using the credit limit completely results in high credit utilisation ratio thereby denting your credit score. ● Using maximum credit limit results in higher credit utilisation ratio The credit utilisation ratio essentially indicates how much credit you have utilised from the total credit limit. For instance, imagine on you have three credit cards with Rs.10,000 credit limit each, you have spent Rs.9,000 on each card, then your credit utilisation ratio becomes 27,000/30,000*100, which is equal to 90%. Experts recommend maintaining a credit utilisation ratio of 30%, which means you need to limit your credit card spending to 30% of the total credit limit.

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