Planning to get your first loan or credit card? How lenders evaluate new-to-credit customers

Key points

• Understanding how lenders evaluate applications can help you improve your chances of accessing formal credit.
• (AI image) Existing Relationship with the Bank Job and Income Stability Bank Statements and Cash Flow Behaviour Challenges for Lenders in the Current Credit Ecosystem New-to-Credit vs Poor Credit History How To Build Your Creditworthiness for the Future Opt for entry-level/FD-backed credit cards Addition of co-applicants Small-ticket loans (The author, Santosh Agarwal is the CEO of Paisabazaar) Getting your first loan or credit card can often be a challenge.
• Your lack of credit history makes it difficult for lenders to assess your creditworthiness, which essentially means banks and NBFCs have no historic data around your credit behaviour to judge whether you would be a reliable borrower and pay your EMIs and credit card dues on time.
• Due to this, many ‘new to credit’ customers are left with limited options.But understanding how lenders evaluate such applications...