In a 2014 report, RBI has made tips of never to reject loans to brand new or first-time borrowers. Nonetheless, numerous banking institutions and NBFCs are nevertheless maybe perhaps perhaps not lending that is comfortable new borrowers. Very first time borrowers face a challenge that is unique getting that loan just like minimum credit score available, it could be problematic for credit agencies to calculate a credit history and lack of credit rating causes it to be problematic for banking institutions to provide. This bring about a chicken and egg tale as getting financing without credit rating is hard and developing a credit history without financing is probably not feasible.
How can banks opt to provide to new borrowers with no credit score?
Besides the danger rating for brand new borrowers from different credit reporting agencies, banking institutions have begun making use of various surrogate parameters to assess the credit that is likely of brand new borrowers. A few of the parameters used are:
Balance in Savings Banking Account:
Keeping a decent balance in the checking account is one factor which could assist the lender gets a photo regarding the borrower’s funds. By way of example, in the event that account holder regularly keeps a good level of cost cost savings (more than the balance that is minimum) inside the account, this implies a speedyloan.net/reviews/cashnetusa cushty funds place. Having said that, a regular low stability into the account could suggest that the funds are extended.
Cheques issued without sufficient stability when you look at the account will resulted in cheque being bounced back. This also adds in as a factor that is negative determining the credit rating. Self- self- Disciplined honouring of cheques granted is known as to become a credit factor that is positive. Continue reading “Exactly why is it difficult for First Time Borrowers to obtain a loan?”