Good news for people applying for a loan for the first time — the government has confirmed that banks cannot reject your loan application just because you have no CIBIL score or a very low score.
Minister of State for Finance Pankaj Chaudhary told the Lok Sabha during the Monsoon Session that the Reserve Bank of India (RBI) has not set any minimum CIBIL score requirement for loan approvals. He added that loan decisions must be based on the bank’s own policy and not only on the applicant’s credit history.
What the Finance Ministry Said?
The clarification is based on RBI’s guidelines, which clearly state that “first-time borrowers’ applications should not be turned down only because they don’t have a credit history.”
Banks are free to check other details such as income, repayment ability, employment, and collateral before approving or rejecting a loan. However, having no credit history alone cannot be a reason for rejection.
What is a CIBIL Score?
A CIBIL score is a three-digit number between 300 and 900 that shows how reliable a person is in repaying loans and credit card dues. It is calculated based on your borrowing and repayment history.
- High Score (750+): Means good repayment record and higher chances of loan approval.
- Low Score (<600): Indicates missed payments or defaults, making loans harder to get.
- No Score/Zero Score: Happens when someone has never taken a loan or used a credit card.
In India, four credit bureaus are licensed by RBI – CIBIL (TransUnion), Experian, Equifax, and CRIF High Mark. Banks usually check your score from these agencies when you apply for credit.
What This Means for First-Time Borrowers
- If you are applying for your first loan, don’t worry about not having a CIBIL score.
- Banks will now focus on your income proof, salary slips, job stability, or business income to judge your repayment capacity.
- If a loan is denied, banks must give you a written reason for rejection.
- You can also start by taking a small loan or secured credit card to build your credit history for the future.
The government decision will help young professionals, gig workers, and small business owners who are new to formal credit. It ensures that people entering the financial system for the first time are not blocked only because they have no past record.
With this move, the government and RBI aim to boost financial inclusion and make loans accessible to millions of first-time borrowers across India.
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