Your CIBIL score is the first thing lenders check when you apply for a loan or credit card. The reasons are quite obvious and one of them is to check the creditworthiness of the applicant. Your CIBIL score holds immense importance when it comes to profiling your credit records in a systematic and understandable banner. The closer your CIBIL score is to 900, the more the chances of getting your loan or credit card approved.
However understanding CIBIL is not easy, particularly for a layman. For example, what if your CIBIL score is NH? What does it mean? How does it affect your loan approval?
Put, a mention of NH in a CIBIL score means no history. But things don’t end here as this NH can refer to one of the following things.
Though a mention of NH isn’t taken negatively by lenders, the credit strategies of some lenders restrict them from sanctioning loans to borrowers that have a CIBIL score of "NA" or "NH". This is when you may apply for a loan from somewhere else and try your luck.
As per the terminology given by CIBIL, an NH mention in the CIBIL score refers to a -1 score which means no history or no credit record available of the borrower. It also refers to the borrower’s credit history of not more than 6 months.
If you find that you have a mention of NH in your CIBIL score and you want to take a personal loan, there are several ways you can take a loan with an NH credit score. Let’s look at the available options.
- High income: If there is no credit history of yours in CIBIL or there is an NH mention in your CIBIL report, it is difficult to get approval on your loan from a bank or NBFC easily. It is entirely up to you how much effort you put into convincing the lender about your creditworthiness with your income and other details. According to various reports, it has been found that people with high incomes have higher chances of getting the loan approved. Don’t forget to provide your income-related docs like salary slips, appraisal letters, bank account statements, Form 16, or ITR submission.
When the lender comes to know that you have a steady and high income, it will make it easier for the lender to decide whether it would be safe to lend the money to you or not.
- Working in a reputed organization: If you work in a top organization like a Fortune 500 company and you have NH mentioned in your CIBIL report, the lender may choose to lend you the money due to the stability and reputation of the organization where you work. Things tend to get easy if you work in a government organization as this increases your credibility tremendously even if there is no history available in your CIBIL report.
- Choose a loan against securities: If you are living under a doubt that it would be difficult for you to get instant loan approval against your present income, you can choose a pledge as collateral to the lender to bring down the credit risk. You can choose a collateral like a Fixed Deposit, Real Estate, Insurance policy, Stocks, Shares, Bonds, or Mutual Fund units. Even if you have a NH credit score, you can get the loan approval this way.
In case you fail to make the repayment against the borrowed amount, the lender can choose to claim the pledged security. This gives a kind of assurance to the lender that he can use the pledged security to recover the pending loan amount if you are not able to repay the borrowed money.
- No credit history for home loans: If you are applying for a home loan, your credit history doesn’t matter to lenders like banks and NBFCs. So, if you have NH in your credit score, it won’t affect your home loan application. This is because the home you are planning to buy would work as collateral against the borrowed amount. So, banks and NBFCs don’t pay closer attention to the credit history of the loan borrowers as they are rest assured that they can easily recover the money by selling the property and recovering the borrowed amount.
- Get a co-applicant: If you have a mention of NH in your CIBIL report, you can attach a co-applicant in your loan application who has a clean credit history. By applying jointly for a loan this way, you can increase your chances of loan approval by the bank or NBFC. This is considered one of the proven ways to get a loan approved if there is NH shown in your CIBIL report and a majority of borrowers opt for this to get a loan.
If you come to know that there is a mention of NH in your CIBIL report, there is nothing to worry about. It simply means that the bureau doesn’t have proper details about your past credit behavior and lenders consider this kind of profile risky. But by taking the above-mentioned steps, you can get your loan approved even with a NH score.
Q. Can a CIBIL score become zero?
- Yes, it is possible. This usually happens when a person’s credit history is less than 6 months old. It simply means that the credit bureau doesn’t have proper information about the person and their credit history.
Q. Is there a difference between a negative (-1) and zero (0) CIBIL credit score?
- A credit score of zero or NA indicates that there is no credit history available and that the credit reporting agency does not have sufficient information to determine the credit account if the person's CIBIL credit history is only accessible for less than six months.
Q. What does a personal credit score mean?
A person's credit score serves as a gauge of their financial stability. It has to do with your propensity to repay debt. It is used by banks and lenders to determine if you will be approved for a loan or credit card. Credit scores in India vary from 300 to 900. A score of more than 700 is usually regarded as excellent.