What Being New to Credit Actually Means for Lenders

Lenders often call borrowers with no credit history “new-to-credit”. These borrowers have little to no borrowing history and, as a result, no credit history. This leads to the CIBIL score being shown as no history (NH) or not applicable (NA). These things are not the same as a less-than-ideal credit score, but rather that the credit bureau has no data about you.

Without a repayment record and a credit number to show consistency, some lenders may not trust the application. Some default to rejection as they do not wish to take risks on a new profile. But some digital lenders and NBFCs check some other details besides the repayment record to check the profile and assess the applicant.

• Scores marked as NH or NA do not mean automatic disqualification when applying for an instant personal loan online.
• Digital lenders check income consistency, bank account activity, and employment stability to assess the repayment capacity.
• Some digital lenders require a borrower to have 3 to 6 months of regular salary and stable bank account activity to assess the candidate in case the bureau scores are absent.

Building Your Profile for an Instant Personal Loan Approval

Before applying for loans, new-to-credit borrowers need to spend a few months building the indicators to get approved easily and the details that the lenders usually check. Having a salary account with consistent credits and responsible spending habits can be an indicator to the lender instead of a credit score in this case.

• Ensure that your salary is credited to the account which you are going to show on your profile.
• The account’s history should be clean, which means no overdraft defaults, no returned cheques or any auto debit failures.
• Be regular with the income tax returns; even salaried employees need to add legitimacy to their profiles, as it can be requested during the verification process.

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What Documents Will You Need for Instant Personal Loan Approval

• Identity proof: This includes Aadhaar card and PAN card, usually for KYC verification
• Address proof: Borrowers can provide a utility bill, rental agreement, Aadhaar, etc., as proof of their current residence
• Income proof: Borrowers can provide their salary slips or bank statements as income proof for a personal loan approval
• Employment details: Some lenders may require the employer’s name, employee ID, or offer letter to confirm current employment status
• Active bank account details: The borrowers need to provide their bank details to get the loan disbursed to their account and for repayment

Common Mistakes That New Borrowers Should Avoid

When applying for the first time, borrowers tend to make a few mistakes. It is important to understand the issues when applying for easy approval and disbursal of the funds. Below are the common mistakes that borrowers often make, so you can avoid them:

• Applying to multiple lenders at once: When you submit an application to a lender, it triggers hard inquiries, which may reduce your credit score slightly. If you apply to several lenders at once, it may appear as financial distress to the lenders
• Borrow only what you need: Borrowing more than necessary can make loan repayments harder to manage.
• Skipping the Key Fact Statement: It is important to check the charges and penalties before you agree to the loan to avoid any surprises later on
• Choosing speed over compliance: If a lender shows unrealistic timelines and there are no signs of proper registration, you may end up facing complications
• Not planning repayment before applying: It is ideal to have a repayment plan set up before borrowing, especially when building a credit profile, to ensure it does not affect the score

How FlexPay Helps New Borrowers Get Started the Right Way

Because of the rise of digital lending, borrowers can build their credit history with transparency and reliability. FlexPay offers borrowers an instant personal loan online up to ₹3,00,000. The application process is completely digital, and the loan can be helpful for starting credit history. Below are the benefits of borrowing from FlexPay

• Income-based assessment: FlexPay evaluates applicants based on several factors, including the consistency of income.
• Fully digital process: The application process for FlexPay is completely online, which means the borrowers do not have to wait in queues or handle extra physical paperwork.
• Instant personal loan approval and disbursal: FlexPay approves and disburses the loans quickly, making it ideal for emergencies and urgent needs.
• No Collateral: FlexPay does not require collateral to approve personal loans, meaning borrowers do not have to risk their assets.
• No prepayment penalties: Borrowers can close the loan early if their financial position allows, without worrying about any prepayment penalties.