The Central Government and the Reserve Bank of India (RBI) have announced a major decision — a minimum CIBIL score will no longer be mandatory for first-time loan applicants.
Banks can no longer reject applications only because of no credit history or a low score. This move will benefit millions of people applying for loans for the first time.
Under the new rules
The RBI has instructed banks to evaluate new applicants based on their overall financial behavior instead of relying only on CIBIL scores.
Factors such as income proof, employment details, and bank balance will now be considered before sanctioning loans.
The government has also ensured that everyone can now get their credit report once a year free of cost in electronic form. Credit bureaus cannot charge more than ₹100 for providing a copy of the report.
Importance of CIBIL Score and Credit Report
A CIBIL score is a three-digit number between 300 and 900 that reflects a person’s credit history. A score above 750 is considered excellent and increases loan approval chances.
However, under the new guidelines, even those with a score below 300 can be eligible for loans if their financial behavior and records are satisfactory.
What should customers do?
Borrowers should pay EMIs on time, use credit cards wisely, and avoid unnecessary loan applications.
It is also important to check your credit report regularly to find and correct any errors that could affect your score.
Responsibility of banks
Banks must now perform a comprehensive financial assessment of customers, examining their income-expense balance and repayment capacity rather than depending only on CIBIL scores. This approach aims to bring greater transparency and fairness in loan approvals.
Expert opinion
Financial experts say this decision marks a major reform in India’s banking system.
It will make credit easier to access, especially for first-time borrowers and low-income groups, and will help strengthen financial inclusion and economic growth across the country.
