What Does it Mean to Have a CIBIL Score of -1?

Lenders are diligent in assessing loan applicants to minimise the risk of defaults. They maintain stringent eligibility criteria, ensuring that borrowers meet certain standards. Failure to meet these criteria can result in loan rejection or less favourable terms, including higher interest rates or shorter repayment periods. 

One of the important facets of the Home Loan eligibility criteria is the credit score or the CIBIL score. An individual's credit score is a three-digit number between 300 and 900, indicating the borrower's ability to repay the loan. The closer a borrower's credit score is to 900, the higher their creditworthiness and ability to repay the loan amount.

Four different credit information agencies are authorised by the Reserve Bank of India to assign credit scores to borrowers. From these agencies, lenders prefer TransUnion CIBIL to assess applicant's credit history. The credit score that TransUnion CIBIL assigns to borrowers is known as the CIBIL score.  

What is the Meaning of a CIBIL Score that is Minus 1 and 0? 

TransUnion CIBIL calculates a borrower's CIBIL score based on several factors, such as their repayment history, the type of loans they have, the number of credit cards, and loan application history. The credit history is an important factor. When a borrower does not have a credit history, TransUnion CIBIl does not have any information based on which it can assign a credit score to borrowers. When this happens, a borrower is given a CIBIL score of 0 or -1. If a borrower's CIBIL score is 0, it means their credit history is only 6 months old. A credit score equivalent to 0 is also sometimes known as NA or 'Not Applicable'. When a borrower's CIBIL score reads -1 or NH or 'No History', it means the borrower has no credit history.   

When it comes to loan approval, the credit score is important. Therefore, a credit score of 0 or -1 can make it difficult for a borrower to avail of a loan. Here's what you can do to enhance your chances of loan approval if you do not have the CIBIL score required for a Home Loan. 

How to Get a Loan Despite Having a CIBIL Score of 0 or -1?

If you have a CIBIL score of 0 and -1, it simply means you either do not have any credit history or your credit history is quite new. In this case, lenders will not be able to assess your creditworthiness and therefore, may reject your loan application. The question is how does one get a loan when their credit score is 0 or -1? Here are a few tips that will help: 

• If your credit score is 0 or -1, it does not mean you are not creditworthy. It simply means that TransUnion CIBIL does not have enough information to assign you a credit score. In this case, you can convince your preferred lender to sanction you a loan by explaining your situation to them. Add your income proof statements to convince your lender of your ability to repay the loan on time.  

• If your chosen lender does not agree to sanction you a loan even after reviewing your income-proof documents, consider adding a financial co-borrower to your loan application. This financial co-borrower must be someone with an excellent credit score and impeccable financial health.

How Does a Borrower's CIBIL Score Impact Their Chances of Loan Approval?

Before deciding on a loan application, all lenders check a borrower's CIBIL score. Borrowers who have a CIBIL score of 750 or above are those who have paid credit card bills and EMIs on time consistently and in general, have a responsible attitude towards credit. Thus, such borrowers may get approved for loans quite easily. This is the reason why the ideal CIBIL score required for a Home Loan in India is 750.

On the other hand, borrowers who have a CIBIL credit score below 750 are those who have defaulted on loans in the past and therefore, show inconsistency in managing credit. Borrowers with CIBIL scores in the range of 700 and 750 are seen as low-risk borrowers by lenders and therefore, such borrowers may get approved for loans in India. However, they may get approved for a loan at high interest rates and with a short repayment tenor. However, if a borrower's CIBIL score is below 625, getting approved for a loan may be challenging. 

So, if you are planning to apply for a Home Loan, do check your credit score. If your credit score is above 750, you can apply for a loan. If it is below 750, work on improving it and apply for a loan once your credit score is at least 750.  

Final Words

Lenders consider a borrower's CIBIL score for loan approval. A score of 750 or higher signifies responsible credit behaviour, enhancing loan approval chances. However, scores of 0 or -1 due to no credit history may pose challenges. Communicating with lenders and adding a financial co-borrower with a good credit score can improve your chances of getting approved for a loan.