How important is credit utilization ratio for CIBIL?
Credit utilization ratio is the ratio of the outstanding balance on your Credit Card to your Credit limit. The lower this ratio, the better for your Credit Score. Note that most credit information bureaus including CIBIL, attach high importance to this factor. This can form as much as 30% of your Credit Score. This means that the credit utilisation ratio has a high impact on your Credit Score.
How can you ensure that this ratio remains low?
A new card or an enhanced credit limit can help achieve low card utilisation ratio. So, divide your expenses across Credit Cards and ask your bank to increase your credit limit. You must understand that increasing your Credit limit is at the discretion of the bank.