CIBIL Score: Banks Now Have A New Way To Evaluate New Credit Customers

TransUnion Cibil, India's oldest credit rating agency, has introduced an eligibility score for consumers who have never taken out a loan or used a credit card and therefore have no structured credit history. TransUnion CIBIL announced the launch of CreditVision NTC Score, a credit scoring solution that will enable credit institutions to evaluate the eligibility of new-to-credit (NTC) customers who have never taken out a loan or credit card from a bank or financial institution.

Now, financial institutions will be able to accurately measure the risk associated with first-time borrowers using the CreditVision NTC Score, allowing them to obtain financing rapidly and efficiently through geographies.

Retail credit demand (as calculated by inquiry volumes) was 91 percent higher in February 2021 than in February 2020, which was substantially higher than the low levels seen during the early months of the pandemic.

In January 2020, 72.30 percent of NTC customers who were granted credit in January 2019 had a TransUnion CIBIL Score of 700 or higher.
In January 2020, 47.29 percent of the 'below prime' existing-to-credit customers (TransUnion CIBIL Score of 300-699) who were granted credit in January 2019 had a score of 700 or higher.
In January 2020, 85.90 percent of the 'prime' existing-to-credit customers (TransUnion CIBIL Score of 700+) who were granted credit in January 2019 had a score of 700+.

The majority of new to credit customers search for two-wheeler loans, followed by consumer durable loans, and home loans, according to an analysis of the share of inquiries made by new to credit customers between January 2019 and January 2021.

Over the last decade, India's credit industry has seen a substantial change, with a growing number of first-time borrowers (NTC) finding credit from institutional lenders. TransUnion CIBIL's ideas and strategies have helped 8.10 crore first-time borrowers open loan accounts over the last two decades.

On a monthly basis, about 24% of loan applications are made by people who have no credit history. Rural and semi-urban areas account for the bulk of inquiries.