FIRST-TIME BORROWERS: HOW TO QUALIFY FOR A GREEN LOAN WITHOUT A CREDIT HISTORY

• Publish on Jun 11, 2025
• Read Time 5 min

India’s push towards sustainability has opened avenues for individuals to invest in eco-friendly solutions like solar panels and electric vehicles. However, first-time borrowers without a credit history and in need of solar financing may struggle to access green loans.

Fortunately, the financial services ecosystem has expanded to accommodate such individuals. This guide provides five solutions to help you qualify for a green loan without a traditional credit background.

1. Understand Alternative Credit Assessment Methods

Traditional credit scores are no longer the sole criteria for loan eligibility. Lenders now consider your income stability. This measures your cash inflow from employment or self-employment and defines your repayment capacity. Also, utility and rent payment records that are in the green without defaulting show financial responsibility.

You must have a healthy history of bank transactions. Bank statements showing savings and regular transactions also demonstrate your financial discipline. Try participating in digital financial platforms, and you’ll get added data points for assessment.

Read More: Understanding ‘CIBIL Written Off’ Status: Implications for our Loan Applications

2. Explore Government-Backed Schemes

The Indian government offers several schemes to support first-time buyers. Stand-Up India Scheme provides personal loans between ₹10 lakh and ₹1 crore to SC/ST and women entrepreneurs for setting up new enterprises. Similarly, the Pradhan Mantri Awas Yojana (PMAY) gives interest subsidies for eligible first-time homebuyers to make green loans more affordable.

While the PM-KUSUM Scheme gives financial aid to farmers installing solar pumps, many states also present subsidies and added incentives for rooftop solar installations.

3. Engage with Specialized Financial Institutions

Certain financial institutions specialize in green investing and cater to first-time borrowers. Non-Banking Financial Companies (NBFCs) and institutions like Ecofy offer personalized green loan products with flexible eligibility criteria and often welcome credit-invisible applicants.

Additional microfinance institutions also provide small loans to individuals with no credit history. This solution works fine for rural India, where small-ticket green loans are increasing. Don't forget, keep an eye on digital lenders who utilize technology to assess creditworthiness based on alternative data.

Pro tip: When applying, highlight your business plan (for an e-rickshaw loan) or estimated savings (for a solar panel installation) to strengthen your case.

4. Consider Secured Loan Options

Secure loans will require collateral. It’s a win-win situation, as your lender’s risk is reduced and your chances of approval increase. Here are some common collateral options:

• Fixed Deposits
  Using a fixed deposit as security can facilitate loan approval.
• Gold Assets
  Gold loans are a common secured loan option in India.
• Property Documents
  Offering property as collateral can support larger loan amounts.

Either way, secured loans often come with lower interest rates and more favourable terms. These may work well in case you need a solar roof loan or electric vehicle loan.

5. Start Building Your Credit Profile

It’s never too late to start building your credit history mindfully. You can increase your future loan prospects by obtaining a secured credit card and using it responsibly to build a positive credit record. It’s then on you to make timely repayments for all loans and bills.

Remember, maintaining low credit utilization, aka credit usage, and staying within recommended limits also shows your financial prudence.

Read More: The Real Cost of Green Living: Is Sustainability Affordable in India?

Verdict

A lack of credit history is no longer a dead-end. Simply showing consistent income, leveraging collateral or a co-applicant, or even choosing an appropriate lender can help finance solar rooftops, EVs, and other sustainable upgrades.

Remember, the future of green finance in India belongs to first-time borrowers who are ready to take charge.

CTA: Apply for a Green Loan Today

FAQs

Can I get a green loan in India without a CIBIL score?
Yes, many NBFCs and fintech lenders in India offer green loans to individuals without a CIBIL score. They evaluate alternative data like income stability, utility bill payments, and banking activity.

What documents do I need to apply for a green loan as a first-time borrower?
You typically need basic KYC documents (Aadhaar, PAN), proof of income (bank statements, salary slips, or GST invoices), and utility bills. Some lenders may also request a guarantor or collateral if you don’t have a credit history.

Are interest rates higher for borrowers without a credit history?
Interest rates may be slightly higher for new-to-credit applicants due to perceived risk. However, offering collateral or applying under a government scheme can reduce rates and improve terms.