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Credit score is one of the primary factors considered at the time of availing loans and credit cards.  It is calculated based on a borrower’s credit history. However, new-to-credit applicants who have never taken a loan or credit card do not have a credit score. Without a credit score, it can get difficult to avail any credit product.

RBI has advised credit institutions that loan applications of first-time borrowers should not be rejected just because they have no credit history.

However, new-to-credit consumers may not be eligible for the following:

  • Pre-approved loan and credit card offers
  • High-ticket loans such as business loans or some home loans
  • Premium credit cards
  • Relaxed loan terms and conditions
  • Low interest rates and cost of credit

Also Read: What’s New in 2025: 5 Major Credit Score Changes

What is the Government’s Clarification?

In response to a set of question regarding the CIBIL score, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, made a few clarifications that impact borrowers and lenders.

For First-Time Borrowers

  • CIBIL score or any other credit score is not mandatory for First-Time Borrowers
  • Lenders should not deny them credit only because they don’t have a credit history for risk assessment

For Existing Borrowers

  • A credit score is mandatory for existing borrowers to assess their creditworthiness
  • Credit Bureaus have to provide one free credit report every year to a borrower
  • RBI has not prescribed any minimum credit score for loan approval

For Lenders

  • Banks are free to request an applicant’s Credit Score from one or more bureaus
  • Lenders are free to take credit decisions as per their commercial considerations
  • Credit report is one amongst various other inputs that lenders consider before granting any credit facility to a prospective borrower.

Why is it Difficult for First-Time Borrowers to Avail Credit?

  • New to credit consumers do not have a history so no credit score is assigned to them.
  • Even if a lender checks the applicant’s credit report, the bureau mentions NH/NS in their report.
  • The risk of loan approval for such applicants cannot be assessed by a bureau or the lender.
  • Under such circumstances, they may not get most credit applications approved.

Suggested Read: How Credit Score Impacts Pre-approved Offers

Alternative to Private Credit Bureaus

The minister was also asked whether the Indian Government had any plans to set up a government credit agency replacing CIBIL and other credit bureaus to do due diligence before lending loans. His response has been summarised below:

  • Currently, there are 4 Credit Information Companies that have been granted Certificate of Registration by RBI –
  • TransUnion CIBIL and other bureaus are private institutions, and many organisations are wary of data theft/breach
  • Any such breach can lead to serious financial implications within the country
  • This led to the proposal of a government institution that can handle both credit and financial data for an applicant’s better risk assessment
  • As of now, there is no proposal to replace any bureau with an alternate mechanism
  • But setting up of NFIR (National Financial Information Registry) has been proposed in the Union Budget 23-24
  • NFIR’s framework shall be designed in consultation with the Reserve Bank of India
  • NFIR shall act as a central repository of all credit and ancillary information of all residents

What should New-to-Credit Consumers Do?

If you are a first-time borrower, you may find it difficult to avail various credit facilities. Follow the suggestions mentioned below and be credit-ready to fulfill your life goals and financial requirements in future.

  • Opt for a secured credit card or small loans if you are new to credit.
  • Follow a disciplined credit behaviour and build your credit score.
  • A good credit score built now will help you get better credit offers when you actually need them.

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