Banks can no longer reject an education loan just because the applicant has a low CIBIL score. This relief comes from an important judgment of the Kerala High Court, which said that students’ education cannot be blocked only due to past credit issues.
What the High Court Said
- The court was hearing a Public Interest Litigation about students being denied education loans for low CIBIL scores.
- It observed that students are the future of the nation, so banks must look at education loans in a humane and compassionate way.
- The court clearly stated: banks cannot refuse education loans only on the ground of a poor CIBIL score; they must check all factors, including future repayment capacity.
The Case That Started It
- A student had earlier taken two loans; about ₹16,000 remained overdue in one of them.
- Because of this, the bank marked the account overdue, and the student’s CIBIL score fell.
- Whenever the student applied for an education loan, banks rejected it citing the low score, so the student moved the High Court for help.
- The court held that in such cases banks should not look only at CIBIL, but also at the course, future earning potential, and genuine need of the student.
What This Means for Students
- Banks can still check CIBIL, but they cannot use it as the only reason to deny an education loan.
- They must consider:
How to Keep Your CIBIL Score Healthy
Even with this judgment, having a good CIBIL score is very helpful for all loans.
