Is digital future defined by credit scores

When you start any loan application online - whether through NetBanking or a fintech app, the first message you see is: "We will fetch your credit bureau report." Have you wondered how many people in India actually have a bureau score? And is someone's repayment capacity really defined by just that number? What if you don't have a score at all?

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That's where smart underwriting steps in. It is reshaping the credit industry in India.

No longer enough for a digital-first India

Among those aged 18-25, only 11 per cent have an active loan product. That means the remaining 89 per cent have little to no exposure to credit.

Now, imagine someone in that 89 per cent who is earning steadily, saving responsibly, and even maintaining a healthy cash flow. None of this is recognised by most lenders.

In a country, where Gen Z and millennials are redefining how we work and earn, relying solely on bureau data isn't just outdated, it's exclusionary.

Why traditional underwriting is failing new borrowers

Even today, the lending ecosystem assumes that every working professional earns a fixed salary. And as a result, they are granted instant low-interest loan approvals (based on their bureau score, and sometimes with no collateral) and credit cards with outrageous limits.

And while the Indian economy is undergoing a major shift, lenders are completely disregarding freelancers, gig workers, startup employees, and digital creators, who now make up a large share of the workforce.

But, for new-to-credit (NTC) customers, the story is very different.

Less than 16 per cent of all new loan originations in Q4 of FY25 went to NTC (New-to-credit) borrowers, down from 23 per cent in the same period. In unsecured personal loans, the numbers drop to 10 per cent, and for ticket sizes above Rs. 50,000, it falls further to 7-8 per cent.