How’s the CIBIL score calculated for a 1st time loan taker

CIBIL score

If you’re in the process of applying for your personal loan for the first time, you’ll have probably come across the credit or CIBIL score requirements for the eligibility criteria. 

It was reported in 2014 that RBI has put across recommendations to not deny loans to new-to-credit (NTC) or first-time borrowers. The truth is that many banks and NBFCs are still uncomfortable lending to first-time borrowers, as they do not have a demonstrated credit history.  

This makes it challenging for the NTC or borrowers with very little credit history available, as the credit bureau to calculate credit score; and without credit score, it is difficult for banks and lenders to provide loans. This creates an endless loop because for an individual to build a credit history, they must avail credit; however, without a credit score, they will not likely to be eligible for a loan in the first place!

If a new-to-credit borrower was to check their CIBIL score, they would see a score of “NA” or “NH”. This is not a bad thing in and of itself and means either that the borrower does not have a credit history, or does not have enough credit history to receive a score (meaning, the borrower is new to the credit system). You may not have had any credit activity over the last few years, or you have add-on credit cards and thus, no credit exposure.

It’s crucial to remember that if as an NTC borrower, the above scores will not be viewed negatively by lenders. However, some lenders have a credit policy that prevents them from providing loans to applicants have NA or NH scores, as they are applicants with no credit track record.  

How Lenders Decide to Lend to New Borrowers with No Credit History

Lenders utilize risk score for NTC borrowers from various credit agencies. However, they have also begun to leverage other parameters to help decide whether the borrower could be a creditworthy individual. Lenders check to see how much balance is in your savings account to get a clear picture of the borrower’s finances. For example, if the potential borrower has consistently maintained a decent amount of savings which is higher than the required minimum balance amount, this shows to the lender that the borrower has a good financial standing. On the flip side, a consistent low account balance over several months can indicate that the borrower’s finances are not in good condition. 

How to Build Your CIBIL Score

If you want to apply for a loan, you will have a far easier time to get your application approved if you have a credit history. Here are some easy ways to build your CIBIL score: 

1)     Student credit cards: It’s never too late to build your credit history, and the sooner the better. If you are a student and working a part-time job, you can apply for student credit cards that provide a low limit of Rs. 10,000- 15,000. As long as you consistently make your credit card payments on time, you will be able to build a strong credit score over time and become eligible for personal loans. 

2)     Co-Signer: As a first-time borrower without a credit report, one may face hiccups when applying for a personal loan or credit card. In such situations, you can get a co-signer for the same which will increase your chances of getting your loan or credit card approved. Bear in mind that it is highly crucial to get a co-signer on board who has an excellent credit history and credit score. 

3)     Repayments: One of the most important things that will affect your credit score is your repayment history. Be extremely vigilant with how much you spend and ensure to repay the entire amount in time, not just the minimum payment.

4)     Apply for a secured credit card: As a first-time borrower, it will be easier for you to get a credit card on the basis of a secured credit card. A secured credit card means that the borrower pledges some amount or collateral as personal assets against the credit card limit. This provides a guarantee to the lender that if you were to default on repayment of the credit card balance, they would have ownership over the assets.  

5)     Apply for a secured loan: Similar to a secured credit card, you can get a higher chance of approval for a secured loan, especially for a smaller amount that you apply for. You can check how much your loan EMI would amount to by using a personal loan EMI calculator.  It is suggested to avail the loan on a longer repayment tenure, so as to bring your EMIs to a low and affordable amount that can very easily be repaid. 


Don’t fret if you are a first-time borrower who is looking to apply for a loan. Without a credit history, some lenders such as Upwards provide loans without CIBIL score to new borrowers, earning a minimum monthly salary of at least Rs. 15,000 per month. When you do get your personal loan approved, ensure that you can repay your loans with ease and build your CIBIL score.