21-July-2016 written by : FSI-Team
CIBIL is a one of the four rating agencies that provides credit rating for individuals in India. The CIBIL score is usually a number ranging from 300 to 900 in most cases but not always. A higher CIBIL rating is indicative of responsible borrowing behavior and a low likelihood of default while lower score indicates the opposite. Generally loans are sanctioned to those who have a score 700 or above. Sometimes the score can be NA or NH and sometimes even 0 or -1 (minus 1). In the following discussion we understand does 0 or NA mean for the borrower.
When a person is given the CIBIL score of "0" zero, it indicates that the credit history is less than six months which is not sufficient to give a credit rating between 300 and 900. This could also be indicated by a "NA" or not applicable.
NH or No History as the name indicates that there is no credit history available for an individual so obviously rating him is not possible. This could also be indicated in numerical terms with a score of -1 (minus 1).
While this is not something that has occurred due to your irresponsible behavior but it could still be a problem as most lenders may not be willing to lend someone who has no credit history or if the history is less than 6 months.
Just like there are options of getting a loan for low credit score, there is way out of this situation too. While a low score is a not such a great place to be in, this is not such a bad option. Depending on what the situation is; whether no history or history less than six months old one could look for a solution.
If the history is less than six months old then simplest thing would be to wait for a while and in the meantime pay your dues on time and continue building your credit history. However sometimes this may not be possible as you want to apply for a loan or a credit card immediately and the application is stuck because of no credit rating. In such a situation if you are employed in the corporate sector you could approach the bank with which your organization has a salary tie-up. Most organizations have a salary credit tie-up with one bank or another; such banks offer not only preferential rates but also faster and easier processing of loans and credit cards for those with whom they have a corporate tie-up. Getting a loan or credit card issued from the bank where the salary credits take place might not be difficult as the bank has some assurance about your monthly credits and is also sure about your credentials as you are employed with that company.
Some lenders may be willing to lend based on salary slips and other such documents like IT returns etc. One could also explore the option of borrowing from co-operative banks who are not very stringent with their policies and may be willing to lend if you are able to convince them. However when borrowing from places other than mainstream banking channels interest rates must be considered as these tend to be little higher at such places.
In the absence of any credit history one could look at starting a credit trail. Again getting a credit card from the bank where you have a salary tie-up could work. If that is not possible then one could explore the option of getting a secured credit card. These are cards that are issued against a fixed deposit held at the bank. Since the bank has collateral in the form of your deposit they are not worried about the default risk and are willing to issue a credit card without a credit score too. The important thing here is to keep making small regular transactions and always pay on time to create a healthy credit trail.
So depending on the reason for 0 or NA you could try and use one of the above options to get a healthy CIBIL score for yourselves which can get you access to credit from mainstream lending channels. Do remember a 0/NA is not a bad thing so finding a way out is not difficult.