Do not worry if you are a first time borrower

September 11, 2014 . FundsIndia Desk

This article is a contribution towards our financial literacy series. It has been written by a specialist in credit and debt counseling – Satish Mehta, Founder and Director of

We all have dreams to fulfill, don’t we? Sometimes, our daily income or savings may not be enough to help achieve our financial dreams. In such a scenario, we make an effort to take help from other sources in the form of loans.

loan_final_Sep11There are some of us who have borrowed from lending institutions before, while there are also some others who have never borrowed. If you belong to the latter category, then congratulations on managing your funds and balancing your needs well. However, in the future, you may wish to own a new car or a home for which the need to avail a loan may arise.

In such a scenario, you need not be hesitant to avail a credit facility, or fret about not having a credit history and hence, no credit score. Here’s why: As per the recommendations of a Committee set up by the Reserve Bank of India (RBI), first time borrowers should not be denied credit due to a lack of credit history.

Hence, lending institutions would assess your credit worthiness in the following ways:

• By monitoring your demographic information details.
• By studying the sample performance of similar groups of people and analysing their behaviour.
• By studying your bank history. It will play an important role in deciding your behaviour in managing your money, e.g., saving accounts.
• By examining your employment history in terms of your stability at work, consistency in performance and dependability.

Lending institutions need to consider these factors, in addition to their internal credit policies. For instance, a conservative lending institution may be averse to approve a credit facility for a person with no credit history, while at the same time an aggressive lending institution could approve that credit facility. So go ahead and take that chance so that you can fulfill your financial dreams. Dream big and fulfill them sensibly. Remember, there is always a first time – even for taking a loan.


Satish Mehta is the Founder and Director of – a credit and debt counselling company that provides end to end customized counselling to individuals by handholding them through their credit life cycle.

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