Credit Card limit Use

 How much limit of Credit Card one should use, so that there is no decrease in Credit score -:

When bank give us Credit card then bank provide Credit card with certain limit, so we can use only upto that limit if we exceed that limit we have to pay additonal penalty

For eg-: Bank provide Credit card to MR.X with limit of 40,000 Rs , so MR X can spend upto 40,000 with his Credit card but if he spend whole amount of 40,000 then it will result in decrease in his Credit Score.

According to expert, one should use only 30% of his Credit card limit or 

better to use only 10% of his Credit card limit

i.e   30% of 40,000 = 30/100*40,000 => 12000 Rs

       10% of 40,000 = 10/100*40,000 => 4000 Rs

so it is better for MR. X to spend only 12000 Rs or 4000 Rs form his 40,000 limit 

by doing so his Credit score increases and his Credit limit would also increase in future

Credit Utilization Ratio ( C.U.R ) -:  

  CASE 1  -:  

    Credit limit ( C.L)  = 40,000 Rs

   Used =  15000 Rs         ( MR. X used 15000 Rs from his 40,000 limit )

  C.U.R =  Used/C.L * 100

             = 15000/40,000 * 100  => 37.5 %

     37.5% > 30%

i.e  MR. X has used 37.5% of his limit which is greater than 30% , which is bad

CASE 2 -:

    Credit limit ( C.L)  = 40,000 Rs

   Used =  8000 Rs         ( MR. X used 8000 Rs from his 40,000 limit )

  C.U.R =  Used/C.L * 100

             = 8000/40,000 * 100  => 20 %

     20% < 30%

i.e  MR. X has used 20% of his limit which is less than 30% , which is Good