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November 10, 2026
Credit cards are now a part of daily life for essential and other expenses; many people carry multiple cards for personal, travel, and business use. Before applying for a personal loan, take a minute to check your credit card dues, as lenders increasingly use your usage patterns to decide whether to approve or decline your application. Here, we explain how your credit card usage affects your chances of personal loan approval and the steps you can take to improve them.
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A personal loan and a credit card are both unsecured credit products issued by Banks and NBFCs, based purely on an applicant’s profile, income, and credit usage. As a result, your credit card usage and repayment track record directly affect your CIBIL score. Lenders check your CIBIL history before issuing a personal loan, so your credit card usage is a major factor in approval.
Credit cards have a maximum usage limit, and your usage counts toward your credit utilisation ratio. If you have 4 credit cards with a total limit of ₹5 lakhs and spend ₹2.5 lakhs in a month, your credit utilisation is 50% of your limit. The ideal utilisation ratio is below 30% of your credit limit. High credit card utilisation makes lenders think you rely heavily on credit. Even if you pay on time, lenders still see it as a risk factor in case you can’t pay on time. The interest rate charged is 36% to 40% per annum, which can affect your monthly outgoings.
Note: Repay your credit card dues before applying for a personal loan to get the loan amount you need.
Banks report all credit card transactions, the amount you spend, the payment amount, and the date, to credit bureaus on an ongoing basis. Pay the minimum amount by the due date; missing a payment will be reported as a late payment. Nonpayment is further graded into 30-, 60-, and 90-day buckets.
Your CIBIL report shows your payment history; the Bank may overlook one or two delayed payments, but a continuous string of delays won’t inspire confidence in a lender when you apply for a personal loan.
Note: If you miss the payment date, pay your bill as soon as possible, as the number of days matters.
Although paying 5% of your credit card bill is mandatory to avoid late payment charges, the high interest on the balance compounds as you keep using it. Paying only the minimum due regularly can inflate credit card bills and trap you in debt. A long outstanding balance on your credit report signals stretched finances, and lenders may deny your personal loan request.
Note: Use your credit card up to the amount you can repay conveniently on the due date.
Banks usually allocate 40% of your total credit card limit to cash withdrawals. Use the cash withdrawal facility only in an emergency, as there is no interest-free period; interest is charged daily on cash drawn from your credit card, so repay it as soon as possible. A cash withdrawal signals that you are spending beyond your budget and should be avoided.
Note: Repay cash withdrawals as soon as possible to avoid extra charges.
Each time you apply for a credit card or a loan, it is recorded in your credit history. Apply responsibly, as each credit card inquiry can lower your credit score by 10 to 15 points. A CIBIL score above 730 points makes you eligible for a personal loan, but 4 to 5 credit card applications may reduce it to 680 points, which is considered marginal.
Banks note the credit card inquiries and assume that the customer is credit-hungry. ICICI Bank and HDFC Bank do not process credit card applications of customers with more than 3 to 5 credit card inquiries in the last 45 days.
Note: Apply for credit responsibly to avoid a CIBIL score decline.
To calculate the loan amount you are eligible for, your credit card outstanding balance is considered part of your monthly obligations and is included in the total along with other loan EMIs. If the total of the obligations exceeds the permitted FOIR (Fixed obligations versus income ratio), the requested personal loan amount is not approved.
Lenders are particularly cautious because credit card interest rates are high if you don’t clear dues by the due date. HDFC Bank will not process a personal loan application if your CIBIL record shows credit card dues of more than 4 to 5 times your monthly salary. Even with a good CIBIL score, your credit card obligations can hurt your chances of getting a personal loan approved.
Note: Check your personal loan eligibility by using the EMI calculator before applying.
When lenders issue a personal loan, they look not only at your current credit status but also at how you have managed your finances over the years. Have you ever faced a financial crisis, and how did you handle it? Did you repay your debts successfully, or did you buckle under pressure? If you have too many late payments or a default, lenders will view that negatively.
In contrast, a vintage credit card with a history of regular payments can build lender trust; keep your old credit cards open, as credit history length matters for a stable CIBIL score.
Note: Don’t close your older credit cards, as they help build your credit history.
| Aspect | What lenders see | What to do |
|---|---|---|
| Utilisation ratio | Heavy reliance on credit | Repay dues before applying; keep utilisation below 30% |
| Payment history | Late payments reported to bureaus | Pay as soon as possible if you miss the date |
| Minimum due only | Stretched finances | Spend only what you can repay on the due date |
| Cash withdrawal | Spending beyond budget | Use only in an emergency and repay quickly |
| Excess applications | Credit-hungry behaviour | Apply responsibly to avoid a CIBIL score decline |
| Outstandings as obligations | Higher FOIR | Check eligibility with the EMI calculator first |
| Vintage of usage | Long, regular repayment record | Keep older credit cards open |
Your credit card plays an important role in personal loan approval; to improve your chances, take note of the following:
Check your Credit Report: Before applying for a personal loan, retrieve your credit report from CIBIL; a self-check will not lower your score. You can confirm whether your score is above the required benchmark and whether any errors need to be corrected. If your score is below the required benchmark, work on how to improve credit score.
Pay your credit card dues to increase eligibility for the loan amount you require. The credit card dues paid must be reflected in your CIBIL history to be included. A payment receipt is not sufficient.
Take a Balance transfer: If you have pending credit card dues, apply to transfer them to a personal loan to reduce your current obligations. AXIS Finance processes balance transfers from your credit card dues to a personal loan, helping you repay the amount conveniently at a lower interest rate. Lower credit card obligations can increase your eligibility, helping you get the festival loan amount you need.
Convert credit card dues into EMI: If you can’t clear your credit card dues by the due date, convert your credit card debt into monthly instalments. Consolidating your debt can help you avoid missing the payment date. Not paying your recent credit card bill can lead to late payment charges. Late payment charges on your credit card statement can lead to a decline of your personal loan application.
Keep your credit utilisation ratio low: Keep your credit card utilisation low to improve your eligibility before applying for a personal loan.
Check eligibility criteria: Confirm your profile meets the lender’s eligibility criteria:
Get in touch with us to help you identify the right lender as per your profile and loan requirements. Connect With Us
Does using a credit card improve my chances of getting a personal loan?
A credit card is an asset if used responsibly; vintage credit cards, regular use, and timely payments of your credit card dues can boost your CIBIL score and help get your personal loan approved. On the other hand, delayed payments and not using it will hurt your chances of getting a personal loan or a festival loan.
What utilisation ratio is good for a personal loan application?
Keep your credit card utilisation under control; if you use it heavily, repay the balance as soon as you can. ICICI Bank may issue a Rubyx credit card with a limit up to 3 times your salary, and you may have multiple cards with regular usage. Keeping your utilisation low is better.
Will a high credit card balance reduce my loan amount?
Your credit card balance counts toward your existing monthly obligations, along with the EMI you pay for other loans. Excessive credit card dues can reduce your personal loan eligibility for the amount you need.
Should I close my credit card before applying for a personal loan?
Paying pending dues and closing a credit card with a history of delayed payments before applying for a personal loan can help your CIBIL score, whereas closing a card you use regularly and pay on time is not advisable, as it can help build credit history and stabilise your Credit score.
Can I get a personal loan with a low credit score because of card defaults?
Credit card usage is classified as unsecured funding, and defaulting on payments will lower your Credit score. It may be harder to secure a personal loan, the interest rate offered may be higher, and you may not get the loan amount you need. Building a timely repayment track record can help raise your CIBIL score and improve your chances over time.
How many cards are too many?
There is no perfect number of credit cards an individual can hold. It depends on your monthly income, usage, and ability to manage credit. Keep the number of cards you use regularly and can manage repayments on.
Before issuing a personal loan, lenders will check your credit card usage, as it directly indicates how you will manage your personal loan repayments. Pay your credit card bills on time and in full; keep utilisation low, and don’t draw cash against your card to improve your chances of personal loan approval.
Check your personal loan eligibility or compare personal loan offers at www.yourloanadvisors.com.
Disclosure: Your Loan Advisors is a loan aggregator and advisory platform, not a lender. Loan approval, interest rates, fees and terms are decided by the lender and may change. Rates and criteria shown are indicative. Please read all terms and conditions before applying.
Disclaimer: This article is for general information and is not financial advice. Credit scoring and lender criteria vary and change, and loan approval depends on each lender’s own assessment. Please read all terms and conditions before applying.
