Ever been denied a loan despite having a decent credit score?
The hidden culprit could be your credit utilization ratio.
Let’s break down what it is, why it matters, and how it directly affects your loan approval odds.
🔍 What is Credit Utilization?
Credit utilization is the percentage of your available credit that you're currently using.
🧮 Formula:
Credit Utilization = (Total Credit Used ÷ Total Credit Limit) × 100
Example: If you have a ₹1,00,000 credit limit and you've used ₹40,000, your credit utilization is 40%.
💡 Why Credit Utilization Matters to Lenders
Lenders view high credit utilization as a sign of financial stress.
👎 High Utilization (Above 50%):
Signals over-dependence on credit
Suggests poor repayment planning
Lowers your credit score
Raises red flags for loan approvals
👍 Ideal Utilization (Below 30%):
Shows disciplined usage
Boosts approval chances
Helps maintain or improve credit score
💬 Vizzve Tip: Keep your credit utilization under 30% for the best loan offers.
🏦 How Credit Utilization Affects Loan Approval
| Utilization Range | Impact on Loan Approval |
|---|---|
| 0–30% | ✅ Very Likely |
| 30–50% | ⚠️ Possibly Risky |
| 50–75% | ❌ Often Rejected |
| 75%+ | 🚨 High Risk, Likely Denied |
📈 Vizzve’s Instant Loan Check Includes Credit Utilization
When you apply through Vizzve, your credit utilization is analyzed in real time.
This helps match you with the best NBFCs or lending partners that suit your current financial status — even if your credit isn't perfect.
🧠 Tips to Improve Credit Utilization Before a Loan
💳 Increase credit limits (but don’t spend more)
🧾 Pay off credit card bills mid-cycle
🚫 Avoid maxing out any single card
🪙 Spread expenses across multiple cards
⏰ Set auto-reminders for payments
✅ Quick Loan Approval Checklist with Vizzve
PAN Card + Aadhaar
3–6 months bank statement
Stable income proof
Credit score (ideally 700+)
Credit utilization under 30%
❓FAQs
Q1: Is 0% credit utilization better than 30%?
Not necessarily. Using a small portion of your credit and repaying it responsibly is better than not using credit at all.
Q2: Does Vizzve reject applications with high utilization?
Not always. Vizzve matches you with lenders that accept wider credit profiles — but lower utilization gets faster approvals.
Q3: Can I improve utilization instantly?
Yes. Pay down credit cards or request a credit limit increase before applying.
Published on : 28th July
Published by : SMITA
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RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed