Using HDFC Bank credit cards reduces one's credit score

[evanferrao]

HDFC doesn't report credit limit to credit bureaus. They say that according to RBI, it's not mandatory to report credit limit (which may be true). But credit utilization is an important factor in calculation of credit score. Thus, most credit bureaus just use the highest used amount as the credit limit. My card currently has a limit of INR 550000, the highest ever used was 139678, the latter of which is considered to be the credit limit by CIBIL and Experian.

Say, I spend 125000 next month. According to HDFC, my utilization would be 22.727% which is well under the 30% recommended limit. However, according to CIBIL and Experian, the utilization would be 90%, which is an immediate red flag, and would surely result in a decrease in credit score. Unlike Credit Enquires and number of accounts, which are low impact parameters, credit utilization and payments are high impact parameters. So, the drop in score should be pretty significant.

There seems to be no solution for now. Big Brain (or rather small) move by HDFC Bank. Penalizing you for using their card and keeping utilization under 30%. The only way one can get around is to get the card, spend its max limit, which will update the credit limit in CIBIL and Experian. This too, however, would temporarily decrease the credit score as the card is maxed out. The “workaround” is as dumb as the employee in charge decided it would be funny if HDFC didn't report credit limit to credit bureaus.

TLDR; HDFC doesn't care about your credit score. Limit their card usage only for availing offers on Amazon/Flipkart etc. For other purchases, it's not worth using a card that actively hurts your score for spending cautiously.
TLDR2; Use HDFC cards only if you have other cards, since the limit of the other cards will bring down ones overall utilization ratio.

Images attached below for reference.
(spending even 20k leaves me with a utilization of 15%)

 

[ltf4ever]

HDFC doesn't report credit limit to credit bureaus. They say that according to RBI, it's not mandatory to report credit limit (which may be true). But credit utilization is an important factor in calculation of credit score. Thus, most credit bureaus just use the highest used amount as the credit limit. My card currently has a limit of INR 550000, the highest ever used was 139678, the latter of which is considered to be the credit limit by CIBIL and Experian.

Say, I spend 125000 next month. According to HDFC, my utilization would be 22.727% which is well under the 30% recommended limit. However, according to CIBIL and Experian, the utilization would be 90%, which is an immediate red flag, and would surely result in a decrease in credit score. Unlike Credit Enquires and number of accounts, which are low impact parameters, credit utilization and payments are high impact parameters. So, the drop in score should be pretty significant.

There seems to be no solution for now. Big Brain (or rather small) move by HDFC Bank. Penalizing you for using their card and keeping utilization under 30%. The only way one can get around is to get the card, spend its max limit, which will update the credit limit in CIBIL and Experian. This too, however, would temporarily decrease the credit score as the card is maxed out. The “workaround” is as dumb as the employee in charge decided it would be funny if HDFC didn't report credit limit to credit bureaus.

TLDR; HDFC doesn't care about your credit score. Limit their card usage only for availing offers on Amazon/Flipkart etc. For other purchases, it's not worth using a card that actively hurts your score for spending cautiously.

Images attached below for reference.
(spending even 20k leaves me with a utilization of 15%)

i guess the percent credit utilisation number takes into account credit limit from all the cards that you hold. so even if you use hdfc card to 100%, it wont affect much IF you hold other cards as well.

sharing ny experience: i have many cards but use hdfc as the primary card for the last year, and my cibil has been increasing.

 

[evanferrao]

i guess the percent credit utilisation number takes into account credit limit from all the cards that you hold. so even if you use hdfc card to 100%, it wont affect much IF you hold other cards as well.

sharing ny experience: i have many cards but use hdfc as the primary card for the last year, and my cibil has been increasing.

I totally understand you. I have other cards too. The combined limit of the other cards are 8L. As a result, my credit utilization is always low. However, the credit utilization ratio could go lower if HDFC reported the credit limit. The new combined limit would be 8(other)+5.5(hdfc actual)=13.5L . Thus allowing the user to spend more without hurting the score. The current combined limit is 8(other)+1.39(hdfc acc to cibil)= 9.39L. This should ideally be 13.5L.
The remaining 13.5-9.39=4.11L is not included in any calculation. 30% of 4.11L would be 1.35L. ( amount that I would be able to spend more if hdfc did its job properly). Not that I encourage spending more and getting into the debt trap, just saying.

TLDR; I should, In theory, be able to use 30% of all the cards. In reality, if I do so, my score would drop because hdfc didnt report the max limit.

For users who only have hdfc cards, it could actively reduce their score. I hope other banks don't do this as well, else it would be a nightmare.
Taking other cards to increase overall limit seems like a good solution for now.

 

[anilkrsh]

Wow... I had never realised this frankly!! After this i checked all my credit scores and hdfc doesn't report this to any bureau.

But the biggest shocker was hdfc wasn't present in Experian report and maybe that's why the score was highest.

 

[vn_1]

"spend its max limit, which will update the credit limit in CIBIL and Experian. This too, however, would temporarily decrease the credit score as the card is maxed out"
I don't think it will hit score badly.
My experience: My Regalia actual limit 3.9L but as per HDFC logic it is only 1.8L. As a workaround, I placed dummy order and cancelled on Amazon and it took my credit limit in credit reports to 3.88L. I don't see any negative change in my score. From 70% utilisation to now 25%.

 

[vn_1]

"spend its max limit, which will update the credit limit in CIBIL and Experian. This too, however, would temporarily decrease the credit score as the card is maxed out"
I don't think it will hit score badly.
My experience: My Regalia actual limit 3.9L but as per HDFC logic it is only 1.8L. As a workaround, I placed dummy order and cancelled on Amazon and it took my credit limit in credit reports to 3.88L. I don't see any negative change in my score. From 70% utilisation to now 25%.

Limit increased to 4.4L last month, so placed and cancelled another dummy order on Amazon few days back. Have to check next month credit report..!

 

[kshitij_0]

Cibil doesn't consider HDFC when computing credit utilization (remaining factors still apply), its always 0% unless you have other cards, there are many other factors affecting Cibil score, don't worry.

And, just check once official CIBIL report before trusting that Onescore UI.

For me, CIBIL considers for HDFC also. I get a correct update of bill on monthly basis in One Score.

 

[kshitij_0]

"spend its max limit, which will update the credit limit in CIBIL and Experian. This too, however, would temporarily decrease the credit score as the card is maxed out"
I don't think it will hit score badly.
My experience: My Regalia actual limit 3.9L but as per HDFC logic it is only 1.8L. As a workaround, I placed dummy order and cancelled on Amazon and it took my credit limit in credit reports to 3.88L. I don't see any negative change in my score. From 70% utilisation to now 25%.

Any suggestion? What can I order and cancel? IPhones? Bill generation with 100% utilised limit is important or just spending and bill can be generated with low amount?

 

[vn_1]

For me, CIBIL considers for HDFC also. I get a correct update of bill on monthly basis in One Score.

Same for me. Utilization is being calculated including HDFC.

 

[EINSTEIN]

Any suggestion? What can I order and cancel? IPhones? Bill generation with 100% utilised limit is important or just spending and bill can be generated with low amount?

Place an order for high end tv or MacBooks

 

[vn_1]

Any suggestion? What can I order and cancel? IPhones? Bill generation with 100% utilised limit is important or just spending and bill can be generated with low amount?

Anything can be ordered and cancelled. I ordered top end laptop and related accessories. My bill generation date is 23rd, so placed order on 28th and cancelled on 30th. That is it. On onescore next month my hdfc limit is mentioned as 3.78L. Utilization came down to 25%. Tried this again on 23rd February after bill generation, this time to take my sanctioned limit to 4.4L. Will post an update here.
Few things:
1. Don't place order just before bill generation, refund takes time, so plan according. Better to do it after bill generation.
2. If you are in big city, your order might be delivered on same or next day. Big danger. Simply returning things is not easy these days.

 

[Chupaxabra]

Cibil doesn't consider HDFC when computing credit utilization (remaining factors still apply), its always 0% unless you have other cards, there are many other factors affecting Cibil score, don't worry.

And, just check once official CIBIL report before trusting that Onescore UI.

Don't bother, I've tried explaining this on another thread. No one believed me. HDFC cards affecting credit utilization is now a well-established "fact", and it will continue to be so 😅

 

[akshayhs]

Thus, most credit bureaus just use the highest used amount as the credit limit.

If HDFC does not report the credit limit, bureaus will not consider the sanctioned amount as credit limit. OneScore is really finnicky because they are probably one among the many non-bureau apps/sites that report it incorrectly. Don't go by their report at all.

However, according to CIBIL and Experian, the utilization would be 90%, which is an immediate red flag, and would surely result in a decrease in credit score

I have not found this to be true at least considering my own reports both to CIBIL and Experian. My scores on both of these platforms haven't taken a nose dive. It may go down 1-5 points but quickly gets restored within the same month. I do have cards from other bank as well. That definitely factors in for my score.

Unlike Credit Enquires and number of accounts, which are low impact parameters, credit utilization and payments are high impact parameters. So, the drop in score should be pretty significant.

When the credit limit is not reported by the issuing bank, bureaus don't consider those cards for computing your credit limits. You can verify this yourself.

TLDR: Don't go by OneScore.

 

[kshitij_0]

Cibil doesn't consider HDFC when computing credit utilization (remaining factors still apply), its always 0% unless you have other cards, there are many other factors affecting Cibil score, don't worry.

And, just check once official CIBIL report before trusting that Onescore UI.

Then how does Credit score fluctuates so violently for those who just have only HDFC Credit Card? Timely payment and Credit Utilisation ratio are the major factors behind credit score. Other factors may increase/decrease the score by 5/10 points max.

 

[knight]

Then how does Credit score fluctuates so violently for those who just have only HDFC Credit Card? Timely payment and Credit Utilisation ratio are the major factors behind credit score. Other factors may increase/decrease the score by 5/10 points max.

I agree with this.
Having only HDFC credit card, my CIBIL has been falling gradually despite timely payments. I feel that improper credit utilization is affecting the score.
Since other factors have not changed significantly.

 

[Slayer]

I agree with this.
Having only HDFC credit card, my CIBIL has been falling gradually despite timely payments. I feel that improper credit utilization is affecting the score.
Since other factors have not changed significantly.

Average HDFC card enjoyer

 

[knight]

Average HDFC card enjoyer

beg your pardon?

 

[jack333]

As Hdfc reports to cibil at month end, if my bill generation date is 15th, it will report to cibil billed amount at month end or the total outstanding amount at month end? In short if i spend more after bill generation before month end without paying the bill, will it help to increase the reported limit in cibil?
@kshitij_0 @vn_1 @Kartik2022

 

[EINSTEIN]

billed amount
Nope
Spend maximum in a single billing cycle

 

[NOOBY]

Place an order for high end tv or MacBooks

But there is a timeline for that right ?

are you saying to book the item 2 days before statement generation date and once its generated, cancel the order ?

For example, if I by 2L TV 2 days prior to stmt date and it gets generated.... then do I have to pay the stmt amount i.e. 2L even though the amount would be refunded by AZ/FK ?

As, then I would have 2L Credit lying in my card from next month 😵