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

When it comes to loans, lenders take extra precautions to make sure that the borrower will not default on loan payment. All lenders have strict loan eligibility requirements. Any borrower who does not meet these eligibility requirements gets automatically rejected for a loan or finds themselves availing of a loan on unfavourable loan terms and conditions, such as high interest rates, short repayment tenor, high prepayment charges in case of fixed-rate loans, etc.  

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 that indicates the borrower's ability to repay the loan money on time and the chances that the borrower will default on repayment. The closer a borrower's credit score is to 900, the higher their creditworthiness and ability to repay the loan money. Four different credit information agencies are authorized by the Reserve Bank of India to assign credit scores to borrowers and TransUnion CIBIL is the most popular of these. 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 sever different factors, such as their repayment history, the type of loans they have, the number of credit cards and loan applications they have made, etc. Of these many different factors, a borrower's credit history is the most important. 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 crucial. 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 find it difficult 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 a lender to sanction you a loan by talking to them and explaining to them your situation. 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 looking at all your income proof documents, consider adding a co-borrower to your loan application. This 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. A borrower's CIBIL score tells a lender how likely it is that the borrower will default on loan payments. Borrowers who have a CIBIL score of 750 or above are borrowers who have always paid credit card bills and EMIs on time and in general, have a very responsible attitude towards credit. Thus, such borrowers get approved for loans quite easily. This is the reason why the minimum 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 borrowers who have defaulted on loans in the past and therefore, cannot be trusted with loan repayment. Borrowers with CIBIL scores in the range of 700 and 750 are seen as low-risk borrowers by lenders and therefore, such borrowers do get approved for loans in India. However, to make up for the risk involved in lending them money, borrowers sanction loans to these individuals at high-interest rates and for a short repayment tenor. However, if a borrower's CIBIL score is below 700, it becomes quite difficult for them to get approved for a loan.   

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

 Final Words

If your CIBIL score is 0 or -1, do not worry. You will be able to secure a loan. However, doing so will require you to put in some efforts. Once you have secured the loan, make sure to pay all credit card bills and EMIs on time. This will help you build a strong credit score and get approved for loans easily in the future.