Latest Update: Finance Ministry Confirms CIBIL Score Not Mandatory for First-Time Borrowers

Breaking News – 24 August 2025

On 24th August 2025, the Ministry of Finance officially announced that CIBIL scores are not mandatory for first-time borrowers.

This means banks cannot reject loan applications solely because an applicant has no prior credit history. The clarification, backed by the Reserve Bank of India’s Master Direction (issued on 6 January 2025), marks a major step toward financial inclusion and opens the doors for millions of new borrowers.

This move is expected to reshape the way housing loans and other credit facilities are approved, especially benefiting young professionals, newly married couples, and families stepping into the property market for the first time.

Latest Update from the Finance Ministry

In a recent clarification in Parliament, Finance Minister of State Pankaj Chaudhary confirmed that the RBI has not prescribed any minimum credit score for loan approvals. Banks cannot reject applications from first-time borrowers simply because they don’t have a CIBIL score. Instead, lenders must consider other financial aspects such as income, repayment capacity, and job stability before taking a decision.

Official Source: Press Information Bureau – Ministry of Finance

What Exactly Did the Finance Ministry Announce?

• CIBIL score not mandatory: First-time borrowers cannot be automatically disqualified for not having a credit score.

• No RBI minimum requirement: The RBI has set no official minimum score for loan approvals.

• Holistic evaluation encouraged: Banks should consider income, repayment capacity, and financial discipline, not just credit history.

• Master Direction reference: As per RBI guidelines, applications of first-time borrowers must not be rejected due to absence of credit history.

Why This Clarification Matters

For years, many first-time borrowers faced challenges due to lack of a CIBIL score. Now:

• No more penalties for having no credit history.
• Banks can review broader financial health like income, employment stability, and repayment ability.
• Financial inclusion strengthened, giving confidence to millions of new homebuyers.
• A boost to real estate demand, as easier loan access will encourage more first-time property purchases.

What Banks Will Now Consider (Beyond CIBIL Score)

Instead of relying only on credit scores, lenders will evaluate multiple aspects such as:

• Income and Employment Stability – Salary slips, IT returns, or business earnings.
• Repayment Capacity – Debt-to-income ratio, disposable income, and savings behaviour.
• Banking History – Account conduct, transaction discipline, and financial stability.
• Collateral or Security – For secured loans, traditional safeguards will still apply.
• Other Stability Factors – Job continuity, residence proof, and overall documentation.

This diversified evaluation allows banks to manage risks responsibly while giving fair opportunities to first-time borrowers.

Read also: Understanding CIBIL Score and its Role in Property Buying: 5 Key Insights

Impact on Housing and Real Estate Buyers

The clarification is expected to bring a noticeable change in the property sector:

• Easier access to home loans – No need to wait years to build a credit score.

• Confidence for first-time buyers – Young professionals and families can apply without hesitation.

• Boost for real estate demand – With more buyers entering the market, housing activity may strengthen further.

If you are planning to explore property opportunities, platforms like MaadiVeedu.com provide verified listings and keep you updated on such key policy changes across the housing sector.

What First-Time Borrowers Should Do Now

To improve your chances of loan approval:

• Gather financial documents – salary slips, IT returns, and bank statements.
• Show steady income proof – employment stability matters.
• Maintain a healthy banking record – avoid cheque bounces and keep transactions clean.
• Approach lenders with confidence – your application will be judged on multiple factors, not just credit history.

Final Thoughts

The Finance Ministry’s clarification is a progressive step toward financial inclusion. First-time borrowers no longer need to feel disadvantaged due to lack of a CIBIL score. With banks now adopting a holistic evaluation system, owning a home has become more achievable than ever before.

For aspiring homeowners, this is the perfect time to step into the property market – your dream of home ownership no longer depends solely on a three-digit number. To explore verified listings and stay informed with real-time property updates, visit MaadiVeedu.com and read more insights at blog.maadiveedu.com.

FAQs

1. Is a CIBIL score mandatory for a first-time home loan?

No. The Finance Ministry clarified that first-time borrowers cannot be rejected just because they don’t have a credit score.

2. Will banks still check CIBIL scores?

Yes, banks may still check CIBIL if available, but it cannot be the sole reason for rejection.

3. What if I have never taken any loan or credit card before?

You can still apply for a home loan. Banks will assess income, employment, and repayment capacity.

4. Can having a good CIBIL score help me get better interest rates?

Yes. While not mandatory, a strong credit record can increase your chances of approval and better terms.

5. How can first-time borrowers improve their chances of approval?

Maintain stable income, reduce debts, provide clear documents, and show financial discipline.

6. Does this apply only to home loans?

No, this applies to all first-time borrowers across different loan types. However, the biggest impact is in housing and personal loans.

7. Which platform can I use to find properties once I get my loan approved?

You can explore a wide range of verified listings on MaadiVeedu.com – a dynamic AI-powered property search platform.