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What Happens When You Max Out & Repay Your Credit Card Every Month

Adhil Shetty

Question: Is maxing out your credit cards every month and paying off the dues on time good for your credit? — P. Chawla

Using your credit card regularly can help you build a good credit score, provided you repay the bill timely to demonstrate that you have financial discipline.

However, maxing out your credit card every month can impact your credit score negatively. The amount you use versus your maximum limit determines your Credit Utilization Ratio (CUR) every month.

For example, if you use ₹50,000 out of your credit limit of ₹1 lakh, your CUR would be 50%.

Often, with a high credit utilization ration, credit bureaus could assume that either you are credit-hungry or have major financial issues. That’s why maxing out your card every month is not a good idea for your credit score.

Ideally, you should try to keep your Credit Utilization Ratio at around 30%.

Here’s some more material that could be useful to you:
Sloppy Credit Card Habits You Must Ditch

Unable To Pay Credit Card Bill? Kya Yeh Aap Hain?

Share your personal finance queries with me on Twitter @adhilshetty and I’ll be happy to answer them.