Are CIBIL Scores Mandatory for Loans? Government Clarifies in Lok Sabha
In simple terms: The Government told Lok Sabha that credit scores (like CIBIL) are useful for banks to
check repayment behaviour, but there is no RBI-mandated minimum score to get a loan. Banks make lending
decisions using their own policies and several inputs — the credit score is just one of them.
What is CIBIL and who manages credit scores?
“CIBIL” refers to TransUnion CIBIL Ltd, one of India’s Credit Information Companies (CICs).
CICs operate under the Credit Information Companies (Regulation) Act, 2005 and its rules/regulations.
They create your Credit Information Report (CIR) and generate a credit score used by lenders.
All four RBI-registered credit bureaus
- TransUnion CIBIL Ltd
- Equifax Credit Information Services Pvt Ltd
- Experian Credit Information Company of India Pvt Ltd
- CRIF High Mark Credit Information Services Pvt Ltd
Cost and your free annual report
RBI rules cap the fee for an individual’s own credit information at Rs. 100. In addition,
every CIC must give you one free full credit report (with score) each year in electronic form if your history exists with them.
Do banks treat the score as “mandatory”?
RBI’s Master Direction: Credit Information Reporting (dated January 6, 2025) says lenders should obtain a CIR (which includes the credit score) as part of their
appraisal. But RBI has not prescribed any minimum score for approving a loan.
- Banks/NBFCs decide using their Board-approved policies and overall risk view.
- For first-time borrowers (no credit history), RBI has advised that applications shouldn’t be rejected just because there’s no history.
- For home, gold, or farm loans, the score is one input among many (income, repayment capacity, collateral, etc.).
Will the Government replace CIBIL or remove the score requirement?
No. The Government plans a National Financial Information Registry (NFIR) — announced in Budget 2023-24 —
as a central repository of credit and related data, designed with RBI. This is not a replacement for CIBIL or other CICs.
Regarding “removing the credit score as mandatory”: credit appraisal is largely deregulated and governed by each lender’s policy and loan agreement.
Lenders are expected to consider past repayment behaviour (delays, settlements, restructures, write-offs, etc.) shown in the CIR to make informed decisions.
What this means for you
- Check your free report yearly from each bureau and correct errors early.
- Pay on time; even small delays lower your score and appear in your CIR.
- If you’re new to credit, build history with a small product (e.g., secured card/limit) — don’t worry if you currently have no score.
- Compare lenders; policies differ. A rejection at one bank doesn’t mean rejection everywhere.