There’s good news for people planning to take a loan. The Ministry of Finance has clarified that a CIBIL score will no longer be mandatory for availing loans. Let’s take a look at what more has been announced by the ministry.
If you are planning to take a loan for the first time and are worried about having a low or no CIBIL score, you can relax now. The Finance Ministry has clearly stated that banks cannot reject loan applications solely on the basis of low or no CIBIL score.
This is a major update for those applying for a loan for the first time. As per the statement made by Minister of State for Finance, Pankaj Chaudhary, in the Lok Sabha, the Reserve Bank of India (RBI) has not prescribed any minimum credit score requirement, particularly for first-time borrowers.
No CIBIL Score Required for First-Time Loan Applicants
RBI issued a Master Direction on January 6, 2025, instructing banks and financial institutions not to reject loan applications merely due to lack of credit history. However, this doesn’t mean that banks will start approving loans without any verification.
Banks will still thoroughly evaluate a borrower’s repayment capacity and financial reliability before approving any loan. They may consider factors such as:
- Credit information reports
- Repayment history of any previous loans
- Loan settlements or restructurings
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Any default history
Even without a CIBIL score, banks will assess the risk associated with lending to a borrower.
Credit Report Fees Capped at ₹100
The Finance Ministry also stated that, under RBI rules, the fee for obtaining a credit report cannot exceed ₹100. Additionally, every individual is entitled to one free credit report (including the credit score) per year in electronic format, provided they have a credit history.
CIBIL Score Will Continue — Not Being Discontinued
Addressing concerns about the future of CIBIL, the government clarified that the CIBIL score is not being discontinued, nor is it being replaced by any government entity. CIBIL and other credit information companies will continue to operate under RBI supervision.
This move aims to make the loan system more inclusive and accessible, especially for young individuals and small entrepreneurs who may not yet have a credit history. By removing the dependency on CIBIL scores for first-time applicants, the government and RBI hope to broaden access to credit while maintaining responsible lending standards.
