Multiple Credit Cards for Better CIBIL Score and Credit Utilization Ratio

The credit cards have changed the way that people splurge and buy stuff and create wealth. Having a credit card has become an essential component of one’s life as it reflects one’s status symbol and thus began the trend of keeping credit cards, which quickly evolved into owning multiple cards, and why not? Credit cards allow you to spend money while giving you enough time to pay it back.

Credit cards are nearly a must in these days of online wallets and paperless purchases. The dilemma is, how many of these plastic cards do you really need in your pocket? In addition, users frequently wonder if having multiple credit cards has a negative impact on their CIBIL score.

Some financial gurus believe that having only one credit card is adequate. However, they are concerned that their clients may pile up extra expenses and huge bills. On the other hand, others argue that having multiple cards is advantageous not only for keeping track of day-to-day expenses and emergency expenses but also for improving your credit score and keeping your credit ratio utilisation as low as feasible.

However, did you know that using multiple credit cards can allow you to better your CIBIL score and Credit Utilization Ratio? In this article, We’ll go through how to improve your CIBIL scores and credit utilisation ratio by using multiple credit cards.

Please remember that you can do CIBIL Score Check Online, and it is through the means of browsing by CIBIL Score Check Free.

How Using Multiple Credit Cards can Allow you to Improve your (CUR) Credit Utilization Ratio?

It may surprise you, but having many credit cards allows you to maintain your credit utilisation ratio much more effortlessly. Let me explain with the help of the table below.

A cardholder in the chart below has two cards, each with a credit limit of Rs2 lakh. He overuses ICICI Bank Card I but underutilized CITI Bank Card II. On Card I, the average CUR is close to 49%, while Card II has a CUR of about 9%.

If the cardholder transfers some of his load from his ICICI card to his Citibank card, he may simply maintain his CUR at a healthy 25-30% on a monthly basis.

As you can see from the table above, instead of using Rs.100,000 on the ICICI card alone, the user might divide the amount across the two cards, i.e., The credit utilisation ratio on the ICICI card would be balanced on both cards as a result of this. Taking advantage of the spend limits on both cards will help you raise your CUR and CIBIL scores.

How to Improve CIBIL Score by Using Multiple Cards?

Now that we know how to enhance the CUR by using multiple cards let’s look at how to improve the CIBIL score.

CIBIL stands for credit utilisation in simple terms. In other words, if a person has a credit limit of Rs 50,000, how much of that Rs50,000 are they utilising on a monthly basis? So, for example, if he/she consumes up to Rs30,000, that’s a 60% usage rate, and they’re considered credit-hungry.

However, if they are using less than 15%, they appear to have ample credit; thus, they are regarded favourably.

Having said that, we know that there are inevitable instances in which one may need to use the credit card in excess of 10% or 15%, so do we risk our CIBIL and CUR scores?

The answer is No. These are the moments when multiple credit cards come in help, allowing us to get out of our current circumstances while also improving our credit scores.

For instance: if a borrower has three cards with a combined utilisation of 10%, they are good. However, if it’s going to be between 60% and 90%, it indicates that they’re credit-hungry, which isn’t a good indicator.

Is Having Multiple Credit Cards and a Higher Credit Limit Advantageous?

We’ve discussed ways to raise your credit score, but what if your credit card limit is insufficient to cover your expenses?

If you find yourself going over your credit limit on credit card purchases and believe you’ve reached your limit, call your bank and ask for a credit limit increase.

According to a recent survey, it has been proven that 89 percent of consumers who request a higher credit limit receive one. So, look no further and request a bigger credit limit from your bank since this could save your credit score.

Let’s imagine you have a credit balance of 80,000 on a card with a limit of 100,000. If you increase your credit limit to 150,000, your credit usage ratio will drop from 80% to 53%.

What Exactly is a Credit Card, and How Does it Work?

Let us begin by defining what a credit card is and how it works.

A credit card is an unsecured loan from a bank with a predetermined credit limit that allows you to make purchases, perform online transactions, and settle payments in stores, malls, and restaurants, etc. To avoid paying interest, the consumer can pay the amount due on the due date or turn the transaction into an EMI and pay over a period of months or years.

This ground-breaking credit card concept has had a long-term impact on the world due to its convenience and security as a payment method.

As convenient as having a credit card is, it comes with a set of regulations to follow in order to maintain your credit score high and a good CUR. There are various ways to check CIBIL score online.

What is a Credit Score?

A credit score is a critical metric for determining a person’s creditworthiness and the financial burden he or she poses. CIBIL Score Check Free is determined by data from your credit reports, such as debt amount, credit history, payment history. Higher ratings indicate that you have displayed responsible credit conduct in the past, which enables lenders to make informed decisions about whether or not to give credit to potential borrowers.

Here’s a quick rundown of credit score ranges.

As shown in the table below, a CIBIL score is a number between 300 and 900 that is calculated by Independent credit bureaus such as Equifax, CIBIL, and Experian.

A credit score of 750 or higher is considered exceptional or good, and the borrower is considered financially stable. A score of 650 to 750 is considered ordinary and reasonable, while a score of less than 650 should be avoided. Because a low credit score makes an applicant incapable of credit, they may have difficulty having loans approved.

What is CUR or Credit Utilization Ratio

CUR is the percentage of a credit card’s available spending limit that has been used. Let me explain this with some examples

1. For instance, if your credit card limit is Rs.2 lakh and you spend Rs.100,000 per month, your CUR is 50%. 

2. Your credit usage would be 0 if you never used your credit cards and had no balance on them.

This ratio is used to measure a cardholder’s credit-management habits and ability to pay off debts.

Why is a High CUR not a Good Thing?

It is advisable to always try to keep your Credit Utilization Ratio as low as possible. A high CUR indicates that a borrower is a credit-hungry and impulsive spender.

A persistently high CUR implies that the cardholder may have monthly payment obligations or is only capable of making the minimum payment due, which affects both the CIBIL and CUR scores. Borrowers should keep in mind that one of the most important aspects in determining the CIBIL score is payback history.

As a result, you must show self-control and discipline when using your credit card. Excessive usage of a credit card, particularly exceeding spending limitations on a regular basis, is not recommended.

Having said that, let us consider whether having many credit cards makes our lives easier and more comfortable by maintaining a good credit score and CUR.

What is the Significance of Credit Scores and Credit Utilization Ratio?

What are the benefits of aiming for a higher credit score? And why does it matter so much to maintain the credit scores and Credit Utilization Ratio? 

Your credit score affects far more than your ability to obtain a low-interest loan.

Credit scores are a financial measure used by insurers to determine premiums for insurance. In addition, they are used by landlords to determine who is eligible to rent their units.

Great credit ratings can help you get better prices on loans, housing, and cell phone contracts, insurance, credit cards. Conversely, bad grades can force you to either miss out or pay more.

• A 5-year home loan of 20 lakhs would cost a low-score borrower 2 lakhs more than a high-score borrower.
• You can develop, defend, and use outstanding credit regardless of your age or income by keeping track of your Finances and credit scores.

To Sum Up CIBIL Score Check Online

While applying for a second credit card is one approach to lower your credit use ratio and improve your credit score, having many credit cards may entice you to spend more than you can afford to repay, wreaking havoc on your finances if you’re not careful.

It is essential to use credit cards only when absolutely essential in order to keep a healthy CUR and show a good history of sensible credit use.

Customers that misuse their credit card or fail to pay their payments on time can quickly accumulate debt. So make sure to avoid using credit cards when you can pay with debit cards, cash instead.

Even if you have multiple credit cards, it is recommended that you pay the entire debt on time rather than just the minimum amount due since this will have a significant impact on your credit scores, one way is to check CIBIL Score Check Online regularly online.

Credit card optimistic people around the world have figured out how to make credit work for them. If you can pay your bills on time and in full, you’ll be in good shape.

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