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Kerala High Court: Education Loan Can Be Denied If Parent Co-Borrower Has Low Credit Score

The Kerala High Court has ruled that an education loan application can be rejected if the parent acting as a co-borrower has a poor credit score. However, the court clarified that the loan could still be considered if there is another eligible co-borrower with a sufficient credit score. The ruling came in response to a case where a student's loan was denied due to the father's low credit rating. The court stated that banks have the right to assess the creditworthiness of co-borrowers, as they are jointly liable for repayment. This decision highlights the importance of credit scores in loan approvals. Education loans typically require a co-borrower, often a parent, to guarantee repayment. A poor credit history can hinder access to funds for higher education. The court's order provides clarity that students can seek an alternative co-borrower with a better credit profile. Financial experts advise maintaining a good credit score to avoid such issues. The ruling is expected to guide banks and financial institutions in processing education loan applications.

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