Not prevalent, at least as of now.
Credit Score is used by Indian Banks to take the basic YES / NO decision on whether to make the loan or not.
Once a YES decision is taken, the interest rate is determined by employer, salary, and other factors – but not Credit Score.
However, this could change imminently.
I’ve been hearing for the last year or two that some Indian Banks are planning to use Credit Score even to determine the interest rate.
It's rumored that some Indian pvt sector banks will soon give loans to people with CIBIL score of only 500 – as against 750 – but at higher interest rate. Wonder how Artificial Intelligence-based lending will compete with a simple Natural Intelligence-based strategy like this.
— GTM360 (@GTM360) December 19, 2018
Essentially, according to the grapevine, some Indian Banks are planning to become aggressive in their lending business and grant loans to no / thin file borrowers with subprime Credit Scores, but at a higher interest rate of 150–200 bps. In other words, Credit Score will be used to set interest rates. Although this is only a rumor as of now, I wouldn’t be surprised if it happens someday since it’s a fairly standard practice abroad.