Having no CIBIL score, or a credit file with limited credit history, can lead to a number of consequences. Banks usually subject applicants with no credit history to additional layer of scrutiny. Alternatively, they can even ask for additional documentation to evaluate their creditworthiness. This tends to make the application process lengthier and cumbersome.
So, it is vital to build a positive credit history over a period of time so that your financial standing can be improved and you can access favourable credit terms in the future.
Having no CIBIL score can have these consequences:
Procuring credit: Banks usually use credit scores to assess the creditworthiness of borrowers. If you have no credit score or history, lenders may consider you as a higher risk borrower since they have no past data to evaluate your creditworthiness. As a result, you may face challenges in obtaining credit cards, loans, or other forms of credit.
Higher rates of interest: Even if you manage to secure credit with no credit score, lenders may offer you less favourable terms, such as higher interest rates or lower credit limits. This is because they may view you as a higher-risk borrower without a proven track record of managing credit responsibly.
Limited access to financial products: Beyond credit, having no credit score may also affect your ability to access other financial products and services, such as renting an apartment, getting a mobile phone contract, or even securing certain jobs. Many organisations use credit checks as part of their screening process.
Problem in building credit: If you don’t have any credit history, it can be quite challenging to start building credit. You may need to explore different credit-building options, which include secured credit cards, credit-builder loans, or becoming an authorised user of someone else's credit account.
Frequently Asked Questions:
How often should you check your credit score?
Most experts recommend to check the credit score at least once a year.
Why is it vital to pay bills on time?
Payment history is a significant factor in determining your credit score. Even a single missed or late payment can negatively impact your score.
Is payment of loan sufficient to maintain a good credit score?
Paying off debt is indispensable to maintain a good credit score. However, it is the responsible financial management that leads to a good CIBIL score.
Does a high CIBIL score offer good rental opportunities?
Landlords may check your CIBIL score at the time of evaluating rental applications. A high CIBIL score can raise your chances of securing rental housing, specially in competitive rental markets.
What is a credit mix?
This refers to the different credit accounts which you have on your credit report. These include car loans, student loans, personal loans and credit cards, among others.
First Published:
25 Apr 2024, 03:23 PM IST
FAQs
If you have no credit score or history, lenders may consider you as a higher risk borrower since they have no past data to evaluate your creditworthiness. As a result, you may face challenges in obtaining credit cards, loans, or other forms of credit.
What is my CIBIL score if I have no credit history? ›
A CIBIL Score minus 1 means that you have no credit history whatsoever. It is assigned when there is no previous borrowing history, no credit card in your name, and no track record on which your creditworthiness can be based.
Is it bad to have no credit history? ›
Yes, having no credit is better than having bad credit, though both can hold you back. Bad credit shows potential lenders a negative track record of managing credit. Meanwhile, no credit means lenders can't tell how you'll handle repaying debts because you don't have much experience.
Will I pass a credit check with no credit history? ›
Lenders will look at more than just your credit report. Their decision is also based on your affordability – all the information they collect from your application and three months of bank statements will be deciding factors for this. So yes, it's possible to get credit with no credit history.
Can you be denied credit for having no credit history? ›
But if you don't have enough of an established credit history to generate a credit score, can you get approved for a credit card? The short answer is yes, but you are limited in the types of credit cards you can get approved for.
Can I get a loan if I have no credit history? ›
You can get a no-credit-check loan by applying through lenders that use alternative information, such as your income and banking history, to approve you. Alternatively, consider other ways to borrow, such as using paycheck advance apps. If possible, take time to build credit before you apply for a personal loan.
How to increase CIBIL score without credit history? ›
Below mentioned are a few measures that can help you gradually build your credit score.
- Apply for Secured Credit Card.
- Apply for a Consumer Durable Loan.
- Choose Buy Now Pay Later (BNPL) Option.
- Approach your Bank where you have an Account for a New Credit Card.
- Pay Your Bills on Time and Utilize Credit Sensibly.
Find the best credit card for you by reviewing offers in our credit card marketplace or get personalized offers via CardMatch™.
- Apply for a secured credit card. ...
- Become an authorized user. ...
- Take out a credit-builder loan. ...
- Keep a close eye on your credit utilization. ...
- Make small purchases and pay them off quickly.
There isn't a set credit score that each person starts out with. Instead, if you don't have any credit history, you likely don't have a score at all.
How long does it take to get a good credit score with no credit history? ›
If you have no credit history, it could take 6 months to a year to reach a decent credit score around 700 with FICO® or VantageScore® models. To attain an excellent score of 800 or higher, expect several years of consistent and responsible credit behavior.
Key Tips for Building Credit Fast:
- Consider a secured credit card.
- Look into a credit-builder loan.
- Find a co-signer.
- Become an authorized user.
- Don't overspend.
How to Improve Your Credit Score
- Review Your Credit Reports. The best way to identify which steps are most important for you is to read through your credit reports. ...
- Pay Every Bill on Time. ...
- Maintain a Low Credit Utilization Rate. ...
- Avoid Unnecessary Credit Applications. ...
- Monitor Your Credit Regularly.
If you have insufficient credit history, it might mean that you have less than 3 years of recent credit experience, a track record of credit mistakes, or just not enough experience with different types of borrowing. Insufficient credit history is something you can start to change in as little as a month.
What is my credit score if I have no credit? ›
There isn't a set credit score that each person starts out with. Instead, if you don't have any credit history, you likely don't have a score at all.
Do I have a CIBIL score if I don't have a credit card? ›
Not using a credit card doesn't deter you from getting a good CIBIL score. In such cases, taking a loan or maintaining a report of timely rental payments could help in maintaining a good credit score. A credit card is not mandatory for maintaining a good CIBIL score.
Do I have a credit score if I have never used a credit card? ›
Yes, you can establish credit and have a credit score without a credit card. Credit card companies are not the only ones that report your payment and usage history to the three credit bureaus that report on your credit score, Experian™, TransUnion® and Equifax®.
Do I have a credit score if I have never taken a loan? ›
If you've never taken a loan, you essentially have no credit history. This absence of credit history can create confusion for credit rating agencies. In such cases, your score might end up being zero, which is a poor credit score.
