Just why is it difficult for First Time Borrowers to obtain a loan?
In a 2014 report, RBI has made tips of never to reject loans to brand new or borrowers that are first-time. Nonetheless, many banking institutions and NBFCs are nevertheless not comfortable financing to new borrowers. Very first time borrowers face a challenge that is unique getting that loan just like minimal credit score available, it could be problematic for credit reporting agencies to determine a credit history and lack of credit history causes it to be hard for banking institutions to provide. This end up in an egg and chicken tale as getting that loan without credit history is hard and developing a credit rating without financing is probably not feasible.
Just how do banks choose to provide to brand new borrowers with no credit rating?
Aside from the risk rating for brand new borrowers from different credit reporting agencies, banking institutions have begun making use of various surrogate parameters to measure the credit that is likely of brand new borrowers. A number of the parameters utilized are:

Balance in Savings Bank-account:

Keeping a balance that is decent the checking account is one factor that might assist the loan provider gets a photo for the borrower’s funds. […]