Credit Card: If you have a credit card, then it is like a boon. If you use a credit card correctly, then it will be of great benefit. If you show even a little carelessness while using the credit card, your credit score can be severely affected, which can cause you to face problems. If you are a new credit card user, you must be extra careful. In this case, the credit card limit has to be kept in mind.

Anyway, every card has a fixed credit limit. Spending within that limit is considered financially secure. Even if the limit is big, spending the entire limit can directly impact your credit health. If your credit score is spoiled, you cannot benefit from a loan in the future.

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Quickly know what the utilization ratio is?

Do you know that it is considered an easy calculation? (Total Expenses ÷ Total Credit Limit) × 100 = CUR. For example, if your card limit is Rs 10 lakh and you have spent Rs 7 lakh in some situations, then your CUR is 70 percent. The lower the CUR, the better it is considered for the credit score. An increase in CUR will mean that you are spending almost or more than the limit, which is considered risky.

How much CUR should be required?

You should know that ideally it should be less than 30 percent. If your credit limit is Rs 2 lakh, try not to spend more than Rs 60,000. You have to pay 30 percent of the limit. This will keep the credit utilization ratio of people under control. The credit score will remain strong, and you can also get better terms for a loan or credit in the future.

What to do when CUR increases?

If you want to keep CUR under control for some reason, then there is an easy solution. You can keep multiple credit cards and divide the expenses among them. In such a situation, suppose you have two cards. The limit of both is Rs 1 lakh each. If you have to spend Rs 1 lakh, then instead of paying the entire amount on one card, you will have to pay Rs 50,000 each.

This will keep the credit utilization ratio of each card at 50 percent. Even though it is a little more than 30 percent, it is much better than 100 percent. This will have less of a negative impact on the credit score.

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