No Minimum CIBIL Score Required for First-Time Borrowers, Finance Ministry Clarifies

The Ministry of Finance has clarified that first-time borrowers are not required to maintain a minimum CIBIL score to secure bank loans.

Speaking in the Lok Sabha during the monsoon session, Minister of State for Finance Pankaj Chaudhary said that banks cannot reject loan applications from new borrowers simply because their credit score is low or absent. He reiterated the RBI’s stance, citing its Master Direction dated January 6, 2025, which advises credit institutions not to deny loans solely due to a lack of credit history.

Chaudhary also confirmed that the RBI has not prescribed any minimum credit score for loan approvals. “In a deregulated credit environment, lenders take decisions based on their commercial considerations, board-approved policies, regulatory guidelines, and multiple inputs, including the Credit Information Report,” he said.

What is a CIBIL Score?

A CIBIL score is a three-digit number between 300 and 900 that reflects an individual’s creditworthiness. Issued by the Credit Information Bureau (India) Limited (CIBIL), it is commonly used by banks to assess eligibility for personal, gold, home, and other types of loans.

Due Diligence Still Required

While not mandatory for first-time borrowers, the Finance Ministry has directed banks to conduct due diligence before sanctioning loans. This includes reviewing applicants’ repayment records, past loans, delayed payments, settlements, restructurings, or write-offs.

Chaudhary further noted that Credit Information Companies (CICs) may charge up to ₹100 for providing an individual’s credit report. Additionally, as per RBI’s 2016 circular, every individual is entitled to receive one free full credit report, including their score, in electronic format each year.