Startups are trying to use rental payment history to help people build credit, targeting those without traditional loan records. However, this model faces significant challenges due to recent RBI restrictions on payment services and the need for traditional banks to accept these alternative scores.
For many young professionals, gig workers, and first-time borrowers, the biggest obstacle to getting a loan is a 'thin' credit file. Even if they pay their rent, electricity bills, and other dues on time every month, this data often stays outside the formal banking system. This means when they apply for a loan, banks may see them as high-risk simply because they have no history of borrowing.
Financial technology firms are attempting to solve this by formalizing rental payment records. Platforms like RentenPe have introduced systems to track these payments and create an alternative 'Rent Score.' The goal is to provide a proxy for creditworthiness that could help these individuals qualify for loans, credit cards, or better interest rates. It is important to note that companies offering these services, such as RentenPe, are private entities and are not listed on Indian stock exchanges.
However, the path to mainstream acceptance is steep. The primary hurdle is the current regulatory environment. In 2025, the Reserve Bank of India (RBI) implemented stricter guidelines for payment aggregators, which significantly limited the use of credit cards to pay rent. This move was part of a broader effort to manage risks associated with unsecured lending and the 'Expected Credit Loss' (ECL) frameworks that banks must follow. Because of these rules, the volume of credit card-based rent payments has dropped sharply, forcing fintech platforms to pivot or scale back their operations.
Furthermore, the value of any alternative credit score depends entirely on whether traditional banks choose to trust it. Currently, there is no government mandate that forces commercial lenders to accept rent-based scores in their loan underwriting processes. Banks continue to rely heavily on data from established credit bureaus like CIBIL, Experian, and CRIF. The RBI has also pushed these bureaus toward faster data reporting, with mandates to update credit information every 15 days, and goals to move toward weekly updates by July 2026. This official infrastructure improvement provides a competing, more standardized way to keep credit files current, which may reduce the need for niche, third-party scoring models.
For investors and market observers, the sector faces a clear tension between innovation and regulation. The core risk is that even if a startup builds a robust technology for rent-based scoring, they remain at the mercy of the RBI’s evolving stance on unsecured credit and data privacy. Additionally, consumers are becoming more cautious about sharing sensitive financial data with private aggregators. The next important update to watch will be whether major banks eventually integrate alternative data points, or if the RBI’s push for faster, formal bureau reporting remains the preferred path for financial inclusion.