I currently have a credit card bill of ₹1 lakh. Over the last two months, I have paid back ₹40,000 and still have ₹60,000 outstanding. Will this remaining balance negatively impact my credit score? If I take a personal loan to clear the entire amount, could that also harm my credit score? I’m concerned because I’ve heard a lower score can create issues when applying for loans in the future.
– Name withheld on request
Carrying an outstanding credit card balance of ₹60,000 can affect your credit score, but the degree of impact depends mainly on credit utilization and repayment behaviour.
Your credit utilization ratio (CUR) is around 60% if your credit limit is approximately ₹1 lakh. Lenders prefer utilization below 30–40%. A consistently high CUR can pull down your score because it signals higher dependence on credit or limited financial flexibility.
If ₹60,000 forms a large share of your available limit, the negative impact becomes clearer, as it suggests heavy reliance on borrowed funds.
Repayment behaviour matters
Your repayment patterns are also very important. Your score will be less negatively impacted if you regularly pay the entire amount owed or at least make sizable payments on time rather than just the minimum.
Paying only the minimum amount for several months or missing or delaying payments are reported to credit agencies and can drastically lower your score. Repeated missed payments are especially harmful and can reflect poorly in your credit report for years, reducing your creditworthiness and potentially leading to higher interest rates on future loans.
Should you take a personal loan to clear the balance?
Taking a personal loan to pay off the ₹60,000 can have both benefits and drawbacks.
Potential benefits
Lower utilization: Clearing the card balance reduces CUR dramatically, which typically boosts your score.
Structured repayment: You replace high-cost revolving credit with a fixed EMI and defined tenure. Consistent EMI payments demonstrate discipline and strengthen long-term credit behaviour.
Possible drawbacks
Hard enquiry: A personal loan application triggers a hard enquiry on your credit report, causing a small but temporary dip in score.
Debt reshuffling: The debt doesn’t disappear—you’ve only shifted it. Missing EMIs on the personal loan can severely damage your score and hurt future borrowing eligibility.
Keeping your utilization low, making all of your loan and credit card payments on time, and avoiding needless additional credit are what really count in the long run.
Therefore, if your utilization remains high or your payments are inconsistent, the ₹60,000 amount could negatively impact your score. However, if a personal loan helps lower your utilization and supports timely EMI repayment, it may raise your credit score while also helping you build stronger financial habits that benefit your credit profile over time.
