First-time borrowers without a CIBIL score should not face outright rejection of loan applications, the government clarified in Parliament.
Minister of State for Finance Pankaj Chaudhary told the Lok Sabha during the monsoon session that the Reserve Bank of India (RBI) has not prescribed any minimum credit score requirement for approving loans. He said RBI has advised banks and credit institutions not to turn away applicants simply because they lack a credit history.
This means individuals applying for their first loan—whether for education, housing, personal, or business needs—can be considered on other parameters.
Banks are expected to assess repayment capacity using income details, employment records, and other financial information, instead of relying solely on a CIBIL score.
In India, a credit score usually ranges between 300 and 900 and reflects a borrower’s repayment track record. While lenders often use it as a benchmark for sanctioning loans, Chaudhary clarified that it is just one among several factors banks may evaluate.
India currently has four licensed credit bureaus—TransUnion CIBIL, Equifax, CRIF High Mark, and Experian—that prepare credit reports. For new borrowers, the absence of such a record does not automatically disqualify them.
For users, the clarification removes a common barrier to accessing formal credit. However, once a loan is availed, repayment behavior will begin to shape the individual’s credit score, influencing future borrowing terms.
