₹5L card limit but used ₹70k? Can it help CIBIL score

A credit card's high limit does not necessitate increased spending, but a lower utilisation ratio can positively influence your CIBIL score. A ₹5 lakh credit limit with only ₹70,000 spent results in a 14% utilization ratio, which is considered strong. While keeping the utilisation below 30% is generally advisable, borrowers aiming for a high score may target under 10%.

Although a lower utilisation ratio is beneficial, it should not be the sole factor considered. Timely repayment remains more crucial than the utilisation ratio. Thus, having a larger credit limit can help maintain a lower utilisation ratio, provided the spending does not increase correspondingly. However, merely having a high limit does not automatically make a borrower a good candidate for larger loans. Lenders primarily focus on the borrower's repayment history and overall debt management.

An unused credit limit can indirectly support a healthy credit profile by keeping the utilisation low, but it should not lead to irresponsible borrowing. Cardholders must use the credit they require, maintain low reported utilisation, and consistently repay their dues on time. A higher limit should be viewed as available borrowing capacity rather than additional income.