Credit utilization rate is the percentage of the borrower’s credit that they have exhausted. They are being calculated by adding the credit used by the borrower and then dividing them up by the total credit line among all the cards that they possess. In simple words, it basically tells how much the borrower has used the credit. The lower the credit utilization ratio, the better he is in the eyes of the lenders.

I read an article on credit utilization rate on It helped me clear my basics on this topic. I also got to know that while evaluating a borrower’s profile, the lenders take into account both the per card rate and the aggregated cards rate. This article also focused upon the relationship between credit cards and cibil score, and how they are linked to each other. It is always recommended to use the limit upto 30% so that your scores are high.

Also when the credit card ratio increases, it becomes very difficult to correct it. Though it can be done by raising the credit card limit.

And the most important fact that the credit card holders should keep in mind is that the banks could lower down the credit card limit. So it really important to be aware all the time.