CIBIL Score Minus 1

Last Updated 19th Jul 2018

CIBIL Score -1, CIBIL Score 0

    First Time Borrowers may find a CIBIL Score -1, CIBIL Score 0 or CIBIL 1-5 mentioned in their credit report, which is different from the 3 digit score of 300-900 assigned by CIBIL to other users. CIBIL Score 0 or -1 reflects that no or limited credit track record is available for the borrower. Some banks offer loan to borrowers with CIBIL 0/-1 based on surrogate parameters.

    Credit Score for first time borrowers
    Rating Score Description
    CIBIL Score 0 No History (NH) or credit track record available for the borrower
    CIBIL Score -1 Credit History Not Available (NA) where borrowers track record is less than 6 months
    CIBIL Score 1-5 CIBIL Transunion 2.0 risk index for new borrowers on a scale of 1 to 5 with 5 being the lowest risk and 1 being the highest risk
    Experian 1-6 Grading Scale for new borrowers, where 6 being the lowest risk of default, and 1 being the highest risk of defa.

CIBIL -1, CIBIL minus 1

A CIBIL score -1 (NH) on a CIBIL credit report indicates that there is No History (NH) or credit track record available for the borrower. You can have CIBIL Score NH (-1) in the following three situations

  • If these is no credit history or credit track record in your name
  • If there is no credit activity for 2 years or your credit repayment history is older than 24 months.
  • You don’t have direct credit exposure on your name (for instance you are just using add on credit cards).

While, fundamentally this is not a bad situation to be in, it deters banks and other lenders to lend to the customer for want of an adequate credit checks/track record. Some banks may reject the application, while a few banks or NBFCs might still decide to lend based on a credit appraisal on other factors including the salary/income proofs, educational background, employer etc. of the prospective borrower.

CIBIL 0, Zero CIBIL Score

A score of 0 (NA) on a CIBIL credit report means Credit History Not Available (NA). This score indicates that the borrower’s available credit track record is for a period of less than 6 months.In this case, banks will evaluate Credit Transunion 2.0.

Many banks have migrated to the new credit score versions, thus improving their ability to take a decision to lend for borrowers with less than 6 months of credit history. However, those on the older credit score versions might still receive a report which gives a score of 0 or -1 for new borrowers.

CIBIL Transunion 2.0

CIBIL has launched a new version of their credit reports knows as CIBIL Transunion 2.0 which follows a different approach for evaluating the past history of the borrower with less than 6 months of credit history. CIBIL 2.0 provides a score or risk index for new borrowers within a range of 1-5, where 1-2 represents the highest risk of default, 3 represents medium risk and 4-5 represents the least risk of default.

The score is dependent on various parameters such as loan type (secured or unsecured), past credit seeking activities (like number of loan enquiries), 3 months overdue in any month for the past loan period, demographics (like age and location) etc.


If you have good CIBIL score, check your loan eligibility online and apply for loan

Experian Score for new borrowers

Other two leading credit score agencies of India, Experian and Equifax have also followed suit by offering credit scores for new borrowers. Experian measures the scores of such customers on a grading scale of one to six, where one means highest risk of default, and six means lowest risk of default.

Equifax score for borrowers with no credit history

Equifax gives a score in the range of 300-900, which is similar to the scores which a potential borrower with adequate credit history would get.

The tool has been especially designed for the Indian market with local data and spending pattern but in line with the international standards. It takes into consideration the demographic factors to validate repayment capabilities, especially for new entrants in the lending market.

Why is it difficult for First Time Borrowers to get a loan?

In a 2014 report, RBI has made recommendations of not to deny loans to new or first-time borrowers. However, many banks and NBFCs are still not comfortable lending to new borrowers. First time borrowers face a unique challenge in getting a loan as with little or no credit history available, it may be difficult for credit bureaus to calculate a credit score and absence of credit score makes it difficult for banks to lend. This result in a chicken and egg story as getting a loan without credit score is difficult and similarly building a credit score without a loan might not be possible.

Different Credit Scoring Agencies use different demographic techniques to score them. The score is calculated and assigned based on a pool of consumers which share a set of similar characteristics of the potential borrowers. Some of the scores and scales used by popular credit scoring agencies such as CIBIL, Equifax and Experian have been mentioned in paragraphs above.

How do banks decide to lend to new borrowers with no credit history?

In addition to the risk score for new borrowers from various credit agencies, banks have started using various surrogate parameters to gauge the likely credit behaviour of new borrowers. Some of the parameters used are:

  • Balance in Savings Bank Account :

    Maintaining a decent balance in the savings account is a factor which might help the lender gets a picture of the borrower’s finances. For instance, if the account holder consistently maintains a fair amount of savings (higher than the minimum balance account) in his account, it indicates a comfortable finances position. On the other hand, a consistent low balance in the account could indicate that the finances are stretched.

  • No cheque Bounce :

    Cheques issued without adequate balance in the account will lead to the cheque being bounced back. This also adds on as a negative factor in determining the credit score. Disciplined honouring of cheques issued is considered to be a positive credit factor.

  • Begin with Small/Secured Loans :

    As a first-time borrower, if will be easier to apply and get loans for simple loans like entry-level secured credit cards, student credit cards, gold loan or a joint loan. Banks are more open to offer small ticket size secured loans to small borrowers and timely servicing of such loans can help build a credit score gradually.

  • Demographics :

    Banks consider the past credit history of people with similar demographics and from similar geographies to draw inferences on the likely credit worthiness of the first-time borrower. Banks consider size of loan, the kind of loan applied and demographics like his age, address, etc. to rate or calculate a representative score for the individual.

  • Employment :

    If the borrower works with a reputed private organization or a public-sector company in a respectable position, then the risk is considered lower as compared to a person who works in a small firm or in a temporary profile. The job of the borrower works as a silent guarantor for the loan amount.

  • Type of residence :

    If the borrower stays in his own house and has been residing there for a long time, then he scores more than a borrower who stays in rented apartment or for a shorter duration. Thus, type of residence also matters from the banks’ perspective for first-time borrowers.

    However in case of First Time Borrowers, banks would like to start with a low credit limit and then increase the same gradually as the credit repayment track record of the borrower builds up.

    How to Build a Good Credit Score for First-Time Borrower or New to Credit Borrower?

    First time borrowers do have a few options to build their credit score from scratch. Getting a credit card is typically the first step towards building a score. Here are few tips on building a good credit score for first time borrowers.

    • Apply for a secured credit card : One of the most trusted ways of building a good credit all by you is by applying for a secured credit card. A secured credit card is the one which requires you to make a security deposit payment against the credit limit. This eliminates some credit default risk in the part of the approvers and thus is likely to get approved without much hassle. This security deposit acts as a collateral against the amount you would be charging in your card and can be withdrawn or refunded once you have a decent credit score and opt for an unsecured account or during the time of closure of the credit account.
    • Get Add-on cards and students credit cards : You can start to build your credit score early by getting add on cards with your parent credit cards or a student credit card with low credit limits. Regular and disciplined usage and repayments on these credit cards can go a long way in building a long credit history and a good credit score. Many banks offer credit cards with low limits of up to Rs.10000-15000 to students studying in reputed colleges.
    • Be an Authorized User : The easiest way to build your credit score without actually using the credit card or paying the balance is by becoming an authorized user of a credit account. Before your become one, make sure you check if the account is in good standing, the balance is paid regularly and is not maxed out and there is no history of default or negative hits on the account. It is advisable that you ask your parents to add you as an authorized user since the credit line is trustworthy and can help you build your credit score faster.
    • Get a Co-signer : If you are a first time borrower and do not yet have a credit report, you might face some hiccups while getting your first credit card or loan. In cases like that, get a co-signer for your credit card or loan which will increase your chances of having the application for credit card or loan approved. However, keep in mind that it is crucial that you get a co-signer with a good credit history.
    • Full payment of Balance on Time : One of the major factors that affect the credit score is the payment history. Make sure you keep a tab on how much you borrow (generally, as much as you can afford to pay off the next month) and pay the full amount in time and not just the minimum.
    • Start with one Credit Card : It is better to start with one credit card and build a good credit score than having multiple ones. As a first time borrower with no history of credit responsibility earlier, it will be difficult to manage multiple credit cards and are more likely to over-borrow and default in payments.

    It is better to keep your accounts open since this just helps increase your credit age. Closing the account may not do any harm but credit bureaus are likely to drop old and closed accounts from the credit report. Also, make sure you use your credit card, responsibly. Taking up a card and not using it will not help the credit score in anyway.


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