CIBIL Score Still Low Despite Paying Credit Card Bill On Time? Check Reason And How To Calculate

A good CIBIL score helps you get loans at lower interest rates, which is why many people use credit cards responsibly to maintain a healthy credit profile. However, there are times when, despite paying your credit card bills on time, your CIBIL score still drops. If you’ve ever faced this situation, let’s understand the possible reasons behind it.

Reason Behind Low CIBIL Score

As important as it is to pay your credit bills on time, it's equally important to manage your credit utilisation. The credit utilisation ratio depends on how much of your credit card's total limit you are using. If a cardholder uses this limit completely, the bank will not consider it valid, Jagran Business reported

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How To Calculate CIBIL Score

The amount you have spent on your credit card and the limit of the card. These two have to be divided- Credit card expenses/credit card limit = credit utilisation

If your credit utilisation ratio is 80 to 90 per cent, it damages your credit history. Even if you make timely payments, it indicates that you are overly dependent on your credit cards.

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What Is The Right Limit?

Cardholders are often advised to use only 30 per cent of their credit card limit. It's also recommended that if you're planning to take out a loan in the near future, keep this limit to 10 to 15 per cent.