If you are thinking of taking a loan for the first time, but you do not have any credit history, then you will worry that the bank or financial institutions do not reject your application. But now there is news of relief, the Finance Ministry of the Government of India has recently clarified in Parliament that no person's loan application can be rejected on the basis of not having a credit history.
Minister of State for Finance Pankaj Chaudhary said in Parliament that in a directive given by the Reserve Bank of India, it has been advised to banks and financial institutions that the application of a loan for the first time should not be dismissed only because they have no credit records. It has been said in this directive that for the first time, those who take loans also have every right to get a loan.
It has also been clarified that the Reserve Bank has not fixed any minimum credit score to give loans. This means that banks have the freedom to decide the loan in their own way based on their policy and other necessary information. Banks are not only dependent on the CIBIL score, but also keeping the customer's repayment capacity, income, job status and other documents in mind.
The government also said that at the time of loan approval, banks are expected to conduct a thorough investigation about the borrower. It also includes credit report, but this does not mean that the loan should be rejected directly if there is no credit score.
There are four companies in India which RBI has authorized to prepare a credit report. These include Transonian CIBIL, Experience, Equifax and Crif High Mark. These agencies have been authorized by RBI to handle the credit information of the people and prepare the report.
