What is credit utilization?
Credit utilization is your outstanding balance divided by your total credit limit, across all cards. Bureaus pull this once a month from card issuers, on the statement date. Even if you pay in full by the due date, the bureau snapshot can show a high balance. Conventional wisdom in India is to keep this under 30% per card and overall to protect your score.
If your only card has a ₹1 lakh limit and you spend ₹60,000 a month (paying in full each cycle), your reported utilization is 60%. Your CIBIL score can drop 30 to 50 points. Either ask for a limit hike to ₹2.5 lakh (utilization drops to 24%) or pay down mid-cycle before the statement date.
Maxing out a single card every month and assuming on-time payment is enough. The score is calculated on the snapshot, not the payment.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.