Inside a Lender’s Mind: What I’ve Learned About Credit Assessment So Far
When I began my journey in the finance industry, especially in the loans and funding space, I was eager to learn. I had heard terms like CIBIL score and credit report, but only after working closely on actual loan files did I realize how vital these factors are. They form the backbone of customer assessment and risk evaluation. Here’s a brief glimpse into what I’ve learned from my experience so far.
One of the very first things we look at when assessing a customer for a loan is their CIBIL score. This three-digit number, which ranges from 300 to 900, gives us an instant snapshot of the individual’s creditworthiness. Over time, I’ve come to understand that while the score may seem like just a number, it carries significant weight in the lending decision process. Generally, a score above 750 is considered strong and is often treated as a positive signal, indicating that the person has handled credit responsibly in the past. Scores between 650 to 750 fall into a moderate or “caution” range. In such cases, we don't immediately reject the application but rather choose to dig deeper into the customer’s overall financial behavior and repayment history. However, when the score drops below 650, it typically raises concerns. This doesn’t mean automatic disqualification, but it does require more scrutiny and justification before any decision is made. That said, one of the most important lessons I’ve learned is that the score alone doesn’t tell the full story. It’s a useful starting point, but to truly understand a customer’s credit behavior, we need to look beyond just the number.
While the CIBIL score gives us a quick overview of a customer’s creditworthiness, it’s the detailed CIBIL report that provides the real insight. Through my experience, I’ve realized that this report goes much deeper and helps us understand the customer’s financial behavior more clearly. We begin by checking the number of active accounts—how many loans or credit cards the individual currently holds. This tells us about their existing credit exposure. Next, we carefully review the repayment history to see if EMIs are being paid on time or if there have been any bounced cheques or missed payments, which can be warning signs. Overdue amounts are also closely observed; even a small overdue, if left pending for a long time, can raise serious concerns about repayment discipline. Another key aspect we look at is the number of credit inquiries—if a customer has made too many recent inquiries, it could indicate credit hunger, suggesting they might be financially stressed or urgently seeking funds. We also pay attention to any settled or written-off accounts in the report, as these typically suggest past defaults or negotiations to close accounts without full repayment. Altogether, these elements help us evaluate the customer’s relationship with credit more thoroughly, reminding us once again that the score is just one part of a much bigger picture.
Beyond CIBIL reports, analyzing bank statements is another crucial parameter It provide a practical and real-time view of a customer's financial habits. We carefully examine several aspects of these statements to assess the applicant's creditworthiness. One of the first things we look at is the Average Bank Balance (ABB), which helps us understand the stability of the customer’s cash flow. A consistent balance indicates healthy financial management. Next, we check for regular salary or business credits to ensure that the income is steady and matches what the customer has declared. Any mismatch here could be a red flag. We also review loan repayments—whether EMIs are being paid on time—and look for any bounce charges, which can indicate poor financial discipline. Additionally, we take note of excessive cash withdrawals or expenses related to gambling, online gaming, or foreign exchange, as these are considered risky behaviors in the eyes of lenders. Over time, I’ve realized that a bank statement reveals far more than just debits and credits; it reflects how a person handles money, manages commitments, and whether they’re financially reliable.
In the lending process, We take a holistic view of the customer’s entire profile before approving a loan. This includes evaluating employment or business stability, which tells us how secure and consistent the customer’s income is. We also consider location, profile risk, business profiles etc. as certain regions or job sectors may carry higher levels of uncertainty. Additionally, we review any current financial obligations—if a customer is already handling multiple EMIs, it raises concerns about over-leverage. Even if someone has a strong CIBIL score, too many existing commitments or signs of financial stress can make us reconsider. This well-rounded assessment helps ensure that loans are given responsibly and that customers are not pushed into financial strain.
What truly stands out for me in this journey is that lending is not just about numbers—it’s about understanding people. Every CIBIL report and bank statement tells a story, and it’s important to look beyond the surface. Sometimes, a low credit score isn’t the result of irresponsible behavior, but rather a one-time event like a job loss, medical emergency, or unexpected life situation. These cases need empathy and a deeper look. On the flip side, even individuals with high credit scores can exhibit risky financial behavior, such as over-leveraging or erratic spending patterns. This has taught me that lending decisions require more than just data—they require judgment, context, and a human touch.