Whalesbook
Lenders are moving past solely relying on credit scores like CIBIL because these scores mainly reflect past behavior. Experts compare CIBIL scores to a 'rearview mirror' – they show where you've been but not always where you're going financially.
Beyond Just the Score
Credit scores aren't the only factor anymore. Lenders use internal scorecards that weigh different aspects like how much credit you use, how long you've had credit, and how steady your income is. So, even borrowers with good scores might be turned down if other signs suggest they're too risky. India's credit risk models are becoming more advanced, looking beyond the main score.
Cash Flow and Debt Load Take Center Stage
A borrower's current ability to manage finances is now key, more so than past credit use. Lenders evaluate income stability, monthly loan payments (EMIs), predictable cash flow, and overall repayment ability. Even those with high credit scores can be rejected if their financial situation looks too strained. A challenge remains for people with limited credit history ('thin files'), making it hard to judge their true financial habits.
A Complete Financial Picture
Lenders are now using more than just credit scores, tapping into broader data sources. They combine banking data, GST records, and transaction details to see a borrower's actual financial habits. How long and varied your credit history is also important – consistent, long-term use often shows more financial strength than short, limited activity. Ultimately, approval often depends on your current debt levels, especially debt-to-income ratios, which show how much capacity you have for new loans.