No CIBIL Score? Why You Need It and How to Build It?

If you have no credit score, you will have a tough time getting a loan or a credit card. Know the golden rules on why you need it!

18 Nov,2022 11:39 IST 17 views
No CIBIL Score? Why You Need It and How to Build It?

Whether a person needs to meet a short-term expense or to plan for a future purchase for a big-ticket article such as a four-wheeler or a house or for children’s higher education, one would need to borrow money from a bank or a non-banking finance company (NBFC).

Almost any type of loan that one takes is dependent on the lender’s assessment of the borrower’s creditworthiness. This is captured in a three-digit number known as the credit score, or more commonly as the CIBIL score, given the acronym of the first entity that started generating such scores in the country.

To be sure, some loans such as a gold loan are not dependent on the CIBIL score. In such cases, the value of the collateral furnished by the borrower itself is enough for the lender to approve a loan application.

But for most other type of loans, especially unsecured loans such as a personal loan or a small business loan, are assessed on the basis of the CIBIL score of the borrower in case of a personal loan and that of the business owner in the case of a business loan. Lenders use it as a first filter to review the loan application.

No CIBIL Score

The CIBIL score lies between 300 and 900 with a higher score seen indicating a good credit history and a lower number representing a person with lower creditworthiness.

But for some people, credit information bureaus like CIBIL do not generate a score. Such credit reports come with a noting as NA or NH. This happens when the person has not had any credit history. Such people have not availed any loan in the past and they are not even using a credit card.

As a result, they do not have any credit behaviour to assess. This could become a problem in the future if one needs to borrow.

How To Build A CIBIL Score

Lenders use the CIBIL score as a first signal of the creditworthiness of a loan applicant. As a result, whenever one makes a loan application, lenders look at the CIBIL Score. This is critical and if one does not have a score yet, he or she should strive to build a credit record as a starter.

This can be done by taking a loan or getting credit cards and using them. A good way to build a CIBIL score is a gold loan. One can take a small amount as gold loan by pledging, temporarily, a personal or family-owned gold ornament.

Since gold loans themselves are not dependent on a CIBIL score they can be an excellent form to build a CIBIL score. It is important to remember that while one doesn’t need to have a good score to avail a gold loan but if one misses dues on the gold loan it negatively impacts the score so one should be careful not to miss the payment schedule.

Gold loans also come with low interest rate and are processed swiftly, making them a good choice to get started with a credit history. As a secured loan it also makes for a good mix while building a credit history. If one has only taken unsecured loans in the past, it does not bode well for a good credit score.

Credit cards usage also helps one build a credit history. The point to remember here is that one needs to pay the dues on time just like any other type of formal loan.

In the case of credit cards, one is required to pay a minimum amount every month, even though a person has the option to pay the entire sum. One needs to necessarily pay the minimum amount to not get a negative marking in the eventual credit score.

Besides these, one should ensure that when once starts building a credit history, one should ensure the repayment schedules do not go off track. This would help in not just building a credit score but also keeping it on the higher side to enable swift loan approvals in the future and that too with a low interest rate and sweet repayment terms.


The CIBIL score, or a credit score, is an essential part of most loan approval processes. Barring a few exceptions such as a secured loan like a gold loan, lenders insist on advancing money to a borrower with high creditworthiness. This is based on the CIBIL score, making it an important to avail a loan.

At times when a person is new in the job market and has not taken any loan in the past and does not even use a credit card, they do not have a CIBIL score. They can build their credit history and get a CIBIL score by taking a gold loan or using a credit card.

IIFL Finance, one of the biggest NBFCs in the country, offers a string of loan products to borrowers including a gold loan, a personal loan and a small business loan besides other secured loans, via a hassle-free digital process. Moreover, IIFL Finance offers the best interest rates and repayment terms to borrowers with high CIBIL scores.

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