The High Court has issued strict Orders to All Banks, giving Relief to those with Low CIBIL Score
CIBIL Score : Even if your CIBIL score is low, banks can no longer refuse to provide loans in certain cases. In a significant ruling, the High Court has provided major relief to people with poor CIBIL scores. According to the court’s decision, if a person’s CIBIL score is low for any reason, banks cannot deny a specific type of loan on that basis alone.
Banks Cannot Refuse This Loan
As per the Kerala High Court’s decision, banks can no longer refuse to grant education loans merely because a student has a poor CIBIL score. Banks are also not allowed to reject a student’s education loan application on this ground. While delivering its judgment, the High Court stated that applications for education loans should be examined in a humane and compassionate manner. The court has issued strict instructions to banks in this regard.
Important Observation by the High Court
The High Court was hearing a Public Interest Litigation (PIL) in this matter. During the hearing, the court observed that students are the future of the nation and the country’s foundation depends on them. Denying an education loan to a student is not appropriate. Therefore, banks cannot refuse to provide an education loan merely on the grounds of a poor CIBIL score. Banks must consider all relevant aspects of the case before making a decision.
Know the Complete Case
A case was brought before the High Court in which the petitioner, a student, had taken two loans. One of these loans had an overdue amount of ₹16,000, due to which the bank marked the loan account as overdue. This negatively impacted the student’s CIBIL score. As a result, whenever the student applied for an education loan, banks rejected the application due to the low CIBIL score.
Facing financial difficulties and being unable to secure an education loan, the student approached the High Court seeking immediate relief. The petitioner stated that the low CIBIL score was creating obstacles in obtaining an education loan. In response, the Kerala High Court ruled that in such situations, banks should not rely solely on the CIBIL score, but instead assess the student’s future repayment capacity while providing education loans.
How to Avoid a Poor CIBIL Score
Whenever you apply for any kind of loan, banks always check your CIBIL score. If your CIBIL score is low, you may face difficulties in getting a loan. In many cases, a low CIBIL score also results in higher interest rates.
To maintain a healthy CIBIL score, always ensure that you pay your loan EMIs and credit card bills on time. Additionally, avoid becoming a loan guarantor for others. If the borrower fails to repay the loan on time, it can negatively affect your CIBIL score as well.