Credit Card Transactions:
Credit card usage is on the rise in India, with over 111 million cards in circulation as of May 2025. This surge in usage is driven by increased digital adoption and growing incomes across the country. However, every time you use a credit card, it leaves a mark on your credit profile, which can affect your loan eligibility in the future.
Your credit score is a key factor that lenders use to assess your loan eligibility. It reflects your ability to repay loans on time. Timely payments without defaults significantly improve your credit score. On the other hand, missed payments can hurt your score, and paying only the minimum due amount can signal financial stress, further lowering your score.
Another important factor is the credit utilisation ratio, which shows how much of your credit limit you’re using. For example, if your credit limit is ₹1,00,000, experts recommend using no more than ₹30,000 of that limit. A high utilisation ratio, especially above 50%, can indicate that you’re heavily reliant on credit, which can make lenders wary. This might lead to higher interest rates or even rejection of your loan application.
To improve your chances of securing a loan, it’s essential to manage your credit card well. Here are some tips:
Pay your credit card bills on time: Always pay your bills on or before the due date to build a strong repayment history.
Keep credit utilisation below 30%: This demonstrates responsible use of credit.
Avoid large outstanding balances: Always aim to pay off your balance in full.
Regularly check your credit report: Ensure there are no discrepancies and dispute any errors.
Use auto-pay or reminders: This can help avoid late payments and penalties.
In 2025, the Reserve Bank of India (RBI) introduced tighter credit reporting rules. Lenders now update credit activity every 15 days instead of monthly. This means your credit habits are reflected in real-time, making it easier for lenders to evaluate your creditworthiness quickly.
So responsible credit card usage today can pave the way for better loan terms in the future. By staying on top of payments and maintaining a low credit utilisation ratio, you can improve your chances of securing loans at favorable rates.
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