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Customers have traditionally received loans from NFBCs based on their credit scores. Conventional lenders use an applicant’s credit score to evaluate or underwrite the trustworthiness of a person. To determine a debtor’s ability to repay debt, lenders consider several factors, such as; loan duration, debt levels, wage, financial history, and payback ratio.


However, because of the lack of standard data, many prospective borrowers with the ability to repay a financed loan are turned down by traditional credit-issuing systems.

Conventional lenders use a human screening process to determine creditworthiness. This results in banks taking days or weeks to notify potential clients of the results. The problem is in the system’s foundation, which produces a loop. To borrow a loan, you’ll need appropriate documentation and a decent credit score. But, you’ll need to borrow a loan to improve your credit score.

As a result, if you lack the required documentation and a decent credit score, to begin with, you may never be able to obtain a loan. So, how do people who are new to credit deal with this issue? FinTech, or financial technology, is the quick answer.


According to the Boston Consulting Group, over 1,000 FinTech start-ups have emerged in India in the last seven years. Gross investment in Indian FinTech lending enterprises increased by 25.49 percent between 2015 and 2019. In 2019, documented loans to tech start-ups totaled $322 million, or 3.18 times the industry’s median quarterly investment of $101 million.

Conventional lenders just reject their credit applications due to a lack of data to assess their creditworthiness. FinTech companies, on the other hand, use a distinct credit scoring system to assess a potential customer’s digital footprint in order to determine creditworthiness. This could contain data from the utilities, telecommunications, banking, and residential and commercial sectors.

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