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Credit card usage has surged in recent times. There is a growing trend among young people to make purchases using credit cards, and they utilize them extensively. Most users are keen to avoid fees, so they ensure their bills are paid on time, believing that timely payments will maintain a healthy credit score (or CIBIL score). However, even after paying the full bill on time, one might notice the CIBIL score dropping; there is a significant reason for this.

It is not enough to simply make timely payments; the manner in which you use your credit card also matters. Therefore, it is crucial to be mindful of certain aspects regarding credit card usage.

**Why does the CIBIL score drop despite timely payments?**
The primary reason for a drop in the CIBIL score, even after timely payments, is high credit utilization. This means you are utilizing a large portion of your available credit limit. For instance, if your card limit is ₹1 lakh and you incur charges amounting to ₹80,000–₹90,000, it impacts your CIBIL score. Withdrawing cash using your credit card can also lower your score. This happens because high spending leads credit bureaus to view you as "credit-dependent"—meaning you rely heavily on debt.

To avoid this, try to limit your credit card usage to 30% of your total limit. Additionally, avoid withdrawing cash using your credit card as much as possible.

**Pay the full amount instead of just the minimum due**
To avoid late fees, some people pay only the "minimum due" instead of the full outstanding amount. This causes their debt burden to increase month after month, and they also end up paying hefty interest charges. Paying only the minimum due can negatively affect your CIBIL score and damage your credit history. Therefore, you should aim to pay off the entire bill.

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