No Credit History? Here’s How Indian Borrowers Can Still Get a Loan in 2025

First-time borrowers often fear that lenders reject applications without a credit score. In reality, banks can assess eligibility using alternate data and documentation. A new look at India’s lending rules shows how borrowers with no past credit can still access formal finance.

Indian lenders tightened screening for applicants with no credit history loan profiles in 2025, Mint reported, as rising retail defaults pushed banks to rely more on bureau-driven risk models.

A credit score is not mandatory under Indian law, but it has become a central tool for lenders assessing risk. When a borrower has no credit history, lenders must rely on employment records, income stability, cash flows and co-applicants. This shifts the decision from automated scoring to manual underwriting, making approvals slower and often harder.

Read More – Are Stricter Loan Approval Requirements Making Borrowing Tougher in 2025? 

How Banks Evaluate Loan Applications Without a Credit Score?

There is no RBI circular stating that a credit score is required for loan approval. However, the Reserve Bank of India governs credit information through the Credit Information Companies (Regulation) Act, 2005 (CICRA) and its directions available under: RBI.org.in → Regulations → Credit Information Companies.

This framework guides how lenders must fetch, use and report borrower information. For a no credit history loan, banks and NBFCs examine alternative indicators:
 

The LoansJagat article explains how borrowers with a no credit history loan profile must strengthen documentation, as lenders often demand income proofs, guarantors or collateral to compensate for missing repayment history.

Why First-Time Borrowers Are Seeing More Scrutiny: Past Trends and Policy Shifts?

India’s lending ecosystem has changed rapidly across the last decade:
 

This shift increased reliance on repayment track records. Borrowers without any credit score fall into the “thin-file” category, which many banks treat as higher risk.

Financial publications have highlighted this tightening:

• Mint noted that lenders now consider behavioural data (salary patterns, spending habits) for applicants with missing scores.
• Economic Times reported that banks often raise interest rates or request co-applicants when dealing with a no credit history loan applicant.

At the same time, new fintech lenders use alternate data, such as rent payments, utility bills and digital transactions, to build credit models for first-time borrowers. But traditional banks still prioritise conventional bureau data.

What Industry Experts Are Saying About Borrowers With No Credit History?

Bank officials quoted in ET say that lack of credit history does not automatically lead to rejection, but risk evaluation becomes manual and therefore stricter. Financial planners told LiveMint that young adults should start building basic credit early using secured credit cards, small consumer-durable loans or timely bill payments reported to bureaus.

Also Read – Here's How the New CIBIL Rules Will Affect Your Loan Chances

LoansJagat experts also noted that improving banking hygiene, stable balances, low cheque bounces, regular salary credits, significantly increases chances of approval for a no credit history loan applicant.

Conclusion

A no credit history loan is very much possible in India, but applicants must show strong income stability, responsible banking behaviour or provide co-applicants. 

As lenders rely increasingly on data-driven models, building a credit footprint early remains the easiest path to smoother loan approvals.

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‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.