Credit Card and Personal Loan Usage in India: What Recent Trends Mean for Borrowers
23 October 2026
Photo: rawpixel (CC0) via Openverse
Overview
Recent headlines from the Hindustan Times highlight a noticeable shift in how Indian consumers are using credit cards and personal loans. While the article does not disclose exact numbers, the trend points to higher reliance on unsecured credit for everyday expenses and larger purchases. For borrowers who already have home loans, loan‑against‑property (LAP) or other secured loans, this change can have several knock‑on effects.
Why the Shift Matters for Existing Loan Borrowers
1. Impact on Your Credit Score
- Credit mix: Adding more credit cards or personal loans changes the composition of your credit profile. Lenders view a balanced mix positively, but a surge in high‑utilisation can lower your CIBIL score.
- Utilisation ratio: If you carry balances close to your credit limit, the utilisation ratio rises, which may signal higher risk to banks offering home loans or LAPs.
2. Potential Influence on Loan Eligibility
- Debt‑to‑Income (DTI) ratio: New unsecured debts increase your monthly outflow, raising the DTI ratio that lenders assess when you apply for a fresh home loan or want to top‑up an existing one.
- Affordability checks: Banks may tighten affordability assessments, especially if they notice a trend of borrowers juggling multiple unsecured products.
3. Interest Rate Sensitivity
- Policy rates vs. personal loan rates: While RBI policy rates affect all loan categories, unsecured personal loans often carry higher floating rates than secured home loans. A broad rise in personal loan usage can signal higher overall credit cost pressure, indirectly influencing how banks price home‑loan products.
Who Is Most Affected?
- First‑time home buyers: They often have limited credit history. Adding a credit card or personal loan early on can shape their credit score trajectory.
- Existing mortgage holders: Those looking to refinance or increase their loan amount may find stricter scrutiny if their unsecured debt load has grown.
- Business owners using personal loans for cash flow: Their personal credit health directly impacts eligibility for business‑related secured loans like loan‑against‑property.
Practical Steps for Borrowers
Step 1: Review Your Credit Report
- Obtain a free CIBIL report and check for any unexpected entries. Look for high utilisation on cards and any missed payments on personal loans.
Step 2: Prioritise Debt Repayment
- If you have multiple credit cards, aim to pay down balances to keep utilisation below 30 % of the total limit.
- Consider consolidating high‑interest personal loans with a lower‑rate loan‑against‑property, if you own a property and the lender allows it.
Step 3: Keep an Eye on Your DTI Ratio
- Calculate your monthly debt obligations (EMIs, credit‑card minimums) and compare them with your net income. A healthy DTI is usually below 40 %.
Step 4: Communicate With Your Lender
- If you plan to apply for a home‑loan top‑up or a new loan, inform your current lender about any recent unsecured credit. Transparency can sometimes help negotiate better terms.
Step 5: Use Best Home Loan’s Tools
- Our EMI calculator and eligibility checker can give you a quick snapshot of how additional credit may affect your loan capacity.
A Simple Comparison Table
| Aspect | Credit Card | Personal Loan | Home Loan / LAP |
|---|---|---|---|
| Security | Unsecured | Unsecured | Secured (property) |
| Typical Rate Range* | Higher than secured loans | Higher than secured loans | Lower than unsecured loans |
| Impact on Credit Score | High utilisation can hurt | Timely repayment helps | Positive if managed well |
| Repayment Flexibility | Minimum payment only | Fixed tenure EMIs | Fixed tenure EMIs |
*Rates vary by lender and borrower profile; check the latest rates on Best Home Loan.
Frequently Asked Questions
Q1: Will using a credit card affect my home‑loan EMI? A: Directly, no. However, higher credit‑card balances can raise your DTI ratio, which lenders consider when approving or revising home‑loan terms.
Q2: Should I close old credit‑card accounts after getting a personal loan? A: Not necessarily. Keeping older accounts open can improve your credit‑age factor, but ensure you don’t let the limits sit idle and attract annual fees.
Q3: Can I convert a personal loan into a loan‑against‑property? A: Some lenders allow top‑up or restructuring of unsecured loans into secured ones, often at a lower rate. Check with your bank for eligibility.
Q4: How often should I check my credit report? A: At least twice a year, or whenever you plan a major borrowing decision.
Q5: What if I miss a credit‑card payment? A: A missed payment can stay on your credit report for up to 30 days before it impacts your score, but repeated defaults will affect future loan approvals.
Final Thoughts
The growing use of credit cards and personal loans reflects changing consumer behaviour in India. While these tools offer convenience, they also introduce new variables that can influence your eligibility and cost for home loans, loan‑against‑property, and other secured credit.
Stay proactive: monitor your credit health, manage debt wisely, and always verify the latest terms with your lender. For a personalized view of how these trends could affect you, compare loan offers on Best Home Loan today.
Source: based on recent news reported by Hindustan Times on 23 October 2026. Details may change — please confirm the latest terms with your lender.
