From faster approvals to fairer assessments, India’s credit landscape is undergoing a quiet revolution.  A new wave of innovation, powered by artificial intelligence (AI), alternative data, and smarter regulatory oversight, is reshaping how credit scoring works in India.

For consumers, this can mean quicker access to loans, but also a greater responsibility to understand what goes on behind the scenes.

Beyond the CIBIL score: What’s changing?

Traditionally, credit bureaus used repayment history, credit utilisation, and loan defaults to calculate your score.

While these remain important, lenders are looking at additional data points—like utility bill payments, spending habits, or even your online behavior—to build a more holistic view of your financial health.

“Lenders are now able to assess risk more accurately using real-time data and intelligent BRE (Business Rule Engine) models,” says Gautam Sinha, CEO of LTFLoW (LoanTap Group). “This not only speeds up loan approvals but also minimises defaults, making lending more efficient.”

One such initiative is from RentenPe, which in 2024 introduced India’s first-ever rent credit score and residence card (R-Card) repository.

This system recognises timely rent payments as a credible indicator of financial reliability—a metric that traditional credit scoring models have long overlooked.

AI, speed, and personalisation—but also new risks

AI is playing a central role in this shift. It’s being used to automate underwriting decisions, predict defaults, and even give consumers tips on improving their scores.

However, the use of AI also raises questions about algorithmic bias, data privacy, and how transparent these models really are.

“There’s potential for regulatory challenges due to the data-driven nature of AI models,” Sinha adds. “This is why financial literacy is critical. Consumers need to know what data they’re sharing and how it’s used to determine their eligibility.”

Financial literacy

Despite the digital push, a large section of borrowers still lacks clarity on how their financial behavior impacts credit eligibility.

Educating users on basic credit concepts—like the importance of paying bills on time, maintaining a good credit utilisation ratio, and reviewing their credit report—can empower them to make better decisions.

To support this, fintech firms are launching new tools to help consumers and small businesses. LoanTap, for instance, has launched BICRI (Business Indicator for Credit Ratings in India), an AI-powered framework that evaluates micro-retailers and MSMEs.

The goal is to bridge the information gap and help lenders reach underserved sectors with reliable, data-backed insights.