The CIBIL Score is a number between 300 and 900, based on your transactions with financial institutions. The higher the CIBIL score, the higher the chances of getting a loan and the easier the conditions become. However, if you have never taken a loan or credit card before, your credit score may be zero.
According to tax and investment expert Balwant Jain, before providing any credit facility to the customer, the lender wants to satisfy itself that the borrower will repay the loan within the stipulated time.
The Credit Information Bureau solves this problem of lenders through credit scores. Lenders are comfortable giving loans to a customer who has a credit score of more than 750.
Can a person without a credit history also get a loan? According to Jain, although the credit score is a starting point for lenders to consider lending to borrowers, it is not the only criterion that lenders see as lending.
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So even if you do not have a credit history, you can take home loans from lenders, but you will have to provide more documents to the lender so that the lender can be satisfied with your ability to pay EMI on time and your intention.
According to Jain, in such a situation your educational qualification and job profile are important criteria used by the lender. For example, if you are a doctor or a CA, it ensures your regular income. Lenders are comfortable with such qualifications.
Similarly, if someone is in a high position in the government such as IAS or IPS, then he is very likely to get a home loan even though he has no previous credit history. If you do not have a government job or higher educational qualification, you can still get a home loan.
In such cases, the lender may ask you for the last few year's bank statements to know your financial status. If there is regular debit information for investments such as Systematic Investment Plans (SIP), then this can assure the lenders about your savings habit.
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Banks can also examine your banking transactions in detail to understand whether you pay utility bills like electricity bills or mobile bills regularly. This gives the lender information about the regularity of your banking transactions.
If you are staying at a rental place, they can also verify the regularity of your rental payment. Your spending and savings habits can be known from your bank statements, which can be used to determine whether you will be able to repay the loan on time.
Banks can also ask you to get a guarantee from someone who has a good credit history and credit score. These are some of the optional criteria that can be used by the lender in the absence of regular credit reports. However, these criteria are not perfect and every bank may have different internal standards.