Prior information of the credit card in question:

  1. Maximum Available Credit limit: र100,000
  2. Available Credit limit: र30,000 --- (Virtually set by me using bank's portal based on my spending habits on the card -- I wish to keep this limit)

Now, I read on the internet that I should only spend around 30% of credit limit to keep a good CIBIL score (Indian credit score).

I have three questions in this scenario:

  1. Is my "30%" calculated based on "Maximum Available Credit limit" or "Available Credit limit"?
  2. In a particular month, I plan to spend र150,000, so I spend र70,000, then pay that bill immediately, then spend the remaining र80,000, making both the payments before the statement generation. Now my statement shows Rs. 0 due at the end of the month. Now, is it considered I drew 0% of my limit or 150% of my limit?
  3. How much is the impact on CIBIL for spending more than 30%?

If any links or pointers can be provided to read more, it'll be much appreciated as well.

1 Answer 1


These answers apply to the US FICO model, but as far as I know this also applies to CIBIL.

  1. The 30% utilization is based on your maximum available credit (र100,000). Your available credit limit is an arbitrary lower limit set by you, and is not used by (and likely not even reported to) CIBIL.
  2. First of all, you may not even be able to spend more than 30,000 while your limit is in place. You may first need to turn off the limit so you can spend more that month. As for what gets reported, typically it is simply the balance on your account on the day it is reported. In your case it will most likely be 70,000, or 80,000, or 0, depending on which day it's reported. You can ask your bank which day it will be reported; oftentimes it's your statement date.
  3. According to this source utilization accounts for 25% of your score. I don't think the exact formula is public information, so you probably can't calculate on your own exactly how much your score will decrease if you are over the recommended 30% utilization threshold. I think you can safely assume as it goes closer to 100%, the more your score goes down up to a maximum number of points.

Side Note: I know this to be true for most scoring models in the US, and I'm guessing that it's also true for India CIBIL scores: In the example case for #2, if you are unlucky and the reporting date catches your high balance of, say, 70,000 or 80,000 for that month, your score will drop only until it is fixed. This means if you already paid it off and it reports at near 0 again the next month, your score will shoot right back up to where it was before. This is the reason why for credit score questions in the US, you'll see a lot of comments like "Who cares?" The point is that it doesn't matter if your score is high or low in any particular month; it only matters what your score is on the day you need to take out a loan for a big purchase such as a car or mortgage. The general advice for these kind of scoring models is to make sure your utilization percentage is low 1 month before using your credit score. Outside of that pay off your Credit Card bills in full every month to avoid paying any interest, and don't worry about optimizing your credit score.

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