No credit history, no loan? Here’s what the rules say for borrowers without a credit score

There is often a misconception among first-time borrowers that they may not qualify for a loan if they do not have a strong credit history. However, the official RBI rules do not prescribe a minimum credit score for loan eligibility. Moreover, the RBI mandates lenders not to reject a first-time borrower's loan application because they do not have a credit history.

The above facts were shared by the Union Minister of State for Finance, Pankaj Chaudhary, in a written reply to a query in the Rajya Sabha on Tuesday, December 9, 2025.

"The extant RBI instructions on credit information reporting require Credit Institutions (CIs), including Banks, NBFCs etc. to include in their loan policies / credit appraisal processes, suitable provisions for obtaining Credit Information Reports (CIRs) from one or more CICs so that the credit decisions are based on credit information available in the system," Chaudhary said.

"However, RBI has not prescribed any minimum credit score for sanction of loan applications to its Regulated Entities (REs). It also mandates CIs that first time borrowers’ loan applications should not be rejected just because they have no credit history," he added.

According to the statement, the information contained in the CIR, would only be one of the inputs amongst various other inputs/factors that lenders would consider before granting any credit facility to a prospective borrower.

Chaudhary further said that credit-related matters are largely governed by the Board of respective lenders based on relevant regulations and statutory requirements. "Further, credit related matters of REs are largely deregulated and the same are governed by the Board approved loan policies of the REs framed under the ambit of relevant regulatory and statutory requirements."

Grameen Credit Score

Replying to a query on whether the Finance Ministry is examining alternative credit-assessment models for first-time borrowers, students and small farmers without prior credit history, Chaudhary said that CICs have been directed by the central bank to develop a framework for Grammen Credit Score.

"For better assessment of credit needs, especially of rural borrowers, CICs have been directed by the RBI to develop a framework for Grameen Credit Score. The development of Grameen Credit Score is expected to help in improving access to formal credit for rural population, including small farmers," he said.

Loan without credit score rules

What the Govt said in July 2025

In July 2025, Chaudhary had informed the Rajya Sabha that the central bank has not proposed any minimum credit score for sanction of loan applications.

Credit score helps in assessing the creditworthiness and capacity of a borrower to repay his loan and advances and discharge his other obligations in respect of the credit facility availed or to be availed by him/her.

"However, the Reserve Bank of India (RBI) has not prescribed any minimum credit score for sanction of loan applications. In a deregulated credit environment, lenders take credit decisions as per their commercial considerations based on their Board-approved policies and broad regulatory guidelines and the information contained in the CIR would be one of the inputs, amongst various other inputs/factors, that lenders would consider before granting any credit facility to a prospective borrower," Chaudhary had said in a written reply to a query on July 29, 2025.

He had further said that credit-related matters of Regulated Entities (REs) are largely deregulated and are governed by the Board-approved loan policies of the REs framed under the ambit of relevant regulatory and statutory requirements and terms and conditions of the loan agreement between the borrower and the RE. "In this context, information on past repayment history, including information on delayed repayments, loans settled, restructured, written-off, etc., in the CIRs, is essential for assessing the creditworthiness of a borrower and to enable lenders to make informed credit decisions," Chaudhary had said.