Why is my CIBIL Credit Score Zero or -1 ? What does a Negative Credit Score Mean?

Ganesh Salunkhe
Jun 6, 2024
2 min read

If you've recently checked your CIBIL score and found it marked as -1, you might be wondering what this means and how it affects your ability to secure a loan. Let's delve into what a -1 CIBIL score signifies and the steps you can take to improve your chances of obtaining credit.

What is a -1 CIBIL Score?

A CIBIL score of -1, also known as "NH" (No History), indicates that you have no credit history recorded with the Credit Information Bureau (India) Limited (CIBIL). This typically occurs if you have never taken out a loan or used a credit card, meaning there is no data for CIBIL to assess your credit behavior.

Why is Credit History Important?

Credit history is crucial for lenders as it helps them gauge your creditworthiness. A robust credit history, reflected by a high CIBIL score, shows that you have a track record of repaying loans on time, making you a lower risk for lenders. Conversely, a lack of credit history makes it challenging for lenders to assess your risk profile.

Can You Get a Loan with a -1 CIBIL Score?

Yes, it is possible to get a loan with a -1 CIBIL score, but it may require some extra steps and documentation to convince lenders of your ability to repay. Here's how you can improve your chances:

Prepare Comprehensive Documentation:

Income Tax Returns (ITRs): Presenting your ITRs can help demonstrate a stable and sufficient income.
Salary Slips: These provide a clear picture of your regular earnings.
Bank Statements: Your bank statements can show your financial habits and account balance trends.
Employment Details: A letter from your employer attesting to your job stability and creditworthiness, along with an identity card, can be beneficial.

Use Alternative Credit Evaluation:

Some lenders may use alternative methods to evaluate your creditworthiness, such as looking at your rental payment history, utility payments, or even non-traditional data points like employment history and income stability.

Opt for a Co-signer or Guarantor:

Having a co-signer or guarantor with a good credit history can bolster your loan application, providing lenders with additional security.

Approach Non-Banking Financial Companies (NBFCs):

NBFCs might be more flexible than traditional banks in lending to individuals with no credit history. They may have higher interest rates, but they can be a good starting point.

Steps to Improve Your Credit Score

Once you've secured a loan, focus on building a positive credit history:

Timely Payments: Always pay your EMIs or loan repayments on time.
Monitor Your Credit Report: Regularly check your credit report for errors and ensure all your credit activities are accurately recorded.
Maintain a Healthy Credit Mix: Diversifying your credit portfolio with different types of loans can positively impact your credit score.

Conclusion

A -1 CIBIL score might seem like a hurdle, but with the right approach, you can still secure a loan and start building a positive credit history. By preparing comprehensive documentation, considering alternative lending sources, and responsibly managing any credit you receive, you can improve your creditworthiness over time.

Remember, building a good credit score is a gradual process, but it opens up more financial opportunities and better loan terms in the future.