Find what percentage of your total credit limit you're using — a key factor in your credit score.
Credit Utilization Ratio = Total balances ÷ Total credit limits × 100. Most scoring models favor keeping this under 30%, with under 10% being ideal.
Credit utilization ratio is simply the percentage of your total available credit card limit that you are currently using, and it is genuinely one of the most influential factors in your CIBIL score — commonly cited as accounting for roughly 30% of the score calculation, right behind payment history. The widely recommended target is staying at or below 30% of your total available limit, both across all cards combined and, ideally, on each individual card — a high utilization ratio signals higher credit risk to lenders even if every bill is paid on time and in full, because it does not measure whether you are managing debt well, only how much of your available credit is currently in use.
A detail that catches many people off guard: utilization is typically calculated from the balance reported on your statement date, not your due date or the balance right before you pay it off — so paying your card in full every month by the due date does not guarantee low reported utilization if a large balance happened to be outstanding when the statement was generated. This is also why closing an old, unused credit card can quietly hurt your score: it reduces your total available credit, which raises your utilization ratio even if your actual spending and balances haven't changed at all.
It is based on your outstanding balance relative to your total credit limit at a specific point in time (typically your statement date), not your total monthly spending. Someone who spends heavily but pays in full before the statement closes can still show low utilization, while someone with a large balance sitting on the statement date shows high utilization regardless of intent to pay it off.
Closing a card reduces your total available credit limit across all cards, which — if your balances stayed the same — raises your overall utilization ratio even though you didn't spend any more. It can also shorten your average account age, another factor in most credit scoring models, which is why keeping old, unused cards open (rather than closing them) is commonly recommended.
Not necessarily — some scoring models actually favor a small amount of reported, on-time-paid utilization (roughly in the low single digits to low teens percent) over completely inactive usage, since it demonstrates active, responsible credit management rather than simply having unused credit. The clear guidance is to stay meaningfully below 30%, not to chase exactly 0%.
Both matter. Your overall utilization across all cards combined is the primary factor, but maxing out a single card while keeping others low can still affect your score negatively, since some scoring models also look at per-card utilization individually, not just the blended total.