So, you’ve just moved back to India after spending years abroad, and now you’re facing a bit of a challenge—getting a personal loan without a credit history in India.
You might have had stellar credit in your previous country, but unfortunately, that doesn’t carry over here. Indian banks and lenders need to see your financial behavior in the local market. Sounds frustrating? It doesn’t have to be.
Let’s break down how you can still secure a personal loan in India, even if you’re starting with a blank slate in the credit department.
In this article...
1. Leverage Your NRI Status: Start with Your Bank
The first thing you’ll want to do is head to the bank where you already have an NRE/NRO or savings account. Banks like SBI, HDFC, and ICICI often have specialized products for NRIs, and they might be more open to offering loans to returning NRIs even if your credit history in India is zero.
Since you already have a banking relationship with them, you’re not a complete stranger, and this can work in your favor. Be prepared to show your income, assets, and foreign banking details as proof of your financial stability.
Pro Tip: If you have a substantial balance in your NRE account, that can give you a bit more leverage during loan negotiations.
2. Consider a Loan Against Fixed Deposit
If your main problem is no credit history, you can try applying for a loan against a fixed deposit (FD). It’s a low-risk, easy-to-get loan that many banks offer, and you can use your FD as collateral.
Here’s how it works: You deposit a lump sum in the bank (as an FD), and they’ll lend you a percentage of that amount as a loan. It’s a win-win because the bank has security, and you get access to the funds you need while your FD continues to earn interest.
Pro Tip: Since this is a secured loan, you’ll likely get a lower interest rate than a regular personal loan.
3. Get a Secured Credit Card First
Before jumping straight into a personal loan, consider building some quick credit history by getting a secured credit card. A secured credit card is backed by a deposit you make with the bank, and it’s one of the easiest ways to establish credit when you’re new to the system.
After using this card responsibly for a few months—paying bills on time and keeping your credit utilization low—you’ll start building a credit score. Once that’s in place, applying for a personal loan becomes much easier. It’s a slightly longer process, but it’s an effective way to get lenders to take you seriously.
Pro Tip: Some banks will allow you to upgrade from a secured credit card to an unsecured one once you’ve shown good credit behavior.
4. Use Your Foreign Income as Proof of Repayment Ability
If you’re still earning an income from abroad, even part-time, use that to your advantage when applying for a loan. Indian lenders might not be able to see your credit history from abroad, but they’ll definitely pay attention to your earning potential.
Show them your pay slips, foreign bank statements, and income tax returns from your previous country to demonstrate your financial stability. This can make you a more attractive borrower, even without a local credit history.
Pro Tip: Highlight any existing financial relationships you had abroad (like credit cards or loans) to prove that you were a responsible borrower in the past.
5. Explore NBFCs (Non-Banking Financial Companies)
If traditional banks are giving you a hard time because of your lack of credit history, check out NBFCs. These financial institutions are generally more flexible and open to working with customers who don’t have an established credit background. They might charge slightly higher interest rates, but if you’re looking for quick access to a personal loan, NBFCs can be a great option.
Some popular NBFCs in India include Bajaj Finserv, Tata Capital, and Mahindra Finance. They often have loan options for NRIs or people with minimal credit history.
Pro Tip: While NBFCs are more lenient, make sure to compare interest rates and repayment terms to avoid paying significantly higher costs.
6. Look Into Peer-to-Peer Lending Platforms
Peer-to-peer (P2P) lending is a growing space in India, and it might be worth exploring if you’re having trouble with traditional banks. These platforms connect borrowers directly with individual lenders, cutting out the middleman (banks) and making it easier to get loans, even if you don’t have an Indian credit score yet.
P2P platforms like Faircent and Lendbox have streamlined processes, and they’re often willing to work with people who are in unique financial situations—like NRIs moving back home with no credit history.
Pro Tip: Be cautious when using P2P platforms. While they can be easier to work with, some lenders may charge higher interest rates or have less transparent terms.
7. Get a Co-Applicant or Guarantor
Another way to secure a personal loan with no credit history is by having a co-applicant or guarantor. This could be a family member or friend who has an established credit history in India. By adding them to your loan application, the bank will feel more confident lending to you, knowing that someone with a strong financial background is backing you up.
It’s a good option if you need funds quickly and don’t want to wait to build your own credit score.
Pro Tip: Make sure the guarantor or co-applicant has a good credit score, as this is the key factor the bank will look at.
8. Maintain a Strong Bank Balance
Even though credit history plays a big role, Indian banks also look at your overall financial health, especially for NRIs. If you can maintain a strong bank balance in your NRE/NRO accounts, it’ll signal to the bank that you’re financially responsible and have the means to repay a loan.
A healthy bank balance could sometimes even outweigh the lack of a credit score when banks evaluate your loan application.
Final Thoughts
Securing a personal loan in India without a credit history can seem like an uphill battle, but with the right approach, it’s entirely doable. Leverage your NRI status, explore different financial products (like loans against FDs or secured credit cards), and don’t hesitate to check out alternative lending platforms like NBFCs or P2P options.
Above all, stay patient. Building a credit profile takes time, but once you’ve got that loan approved and started making repayments, you’ll be well on your way to creating a solid financial foundation in India. Welcome back!
