Data published by Bank Negara Malaysia (as on August 2016) reveal that the total personal loan lendings of all banks in Malaysia totalled 39,319.5 in RM million. This shows the popularity of personal loan borrowings amongst Malaysians.
Personal loans have become very popular mainly for a trifecta of reasons: they don’t require any collateral, interest rates are lower in comparison to credit cards and personal loan proceeds can be used for any purpose deemed fit by the borrower.
Before obtaining a personal loan, Malaysians have to contend with one potential stumbling block – the credit report. In this post, we will look at credit score / credit report in a little more detail:
What is a credit report?
In a nutshell, your credit report is a report of your creditworthiness.
According to Bank Negara Malaysia’s Credit Bureau, the credit report is one of the information sources used by participating financial institutions in assessing credit applications. The credit report contains factual and historical data i.e. both positive and negative information about the credit standing of the borrower as reported by participating financial institutions.
The Credit Report contains the following credit-related information of a borrower:
1) Outstanding Credit(s)
All credit facilities obtained by the borrower, which are still outstanding, either under –
▫ the borrower’s own name;
▫ a joint name with another borrower(s);
▫ a name of a sole proprietorship or partnership where the borrower is the owner of the partnership or the business;
▫ the name of a professional body where the borrower is the member of the body; or
▫ the name of a corporation.
Credit facilities that have been fully settled are excluded from the credit report.
2) Special Attention Account(s)
▫ All outstanding credit facilities under close supervision of the participating financial institutions.
3) Application(s) for Credit
▫ All applications approved in the previous 12 months and pending applications for the borrower.
Can I apply for my credit report?
You can obtain your credit report from the Customer Service Centre, Laman Informasi Nasihat dan Khidmat BNM (LINK) of Bank Negara Malaysia, Head Office or Bank Negara Malaysia Regional Offices / Branches.
You can also get your credit report by email / correspondence by sending the filled-in Credit Report Request Form (CRR), Loan Declaration Form, a clear photocopy of your MyKad (both sides) and two other ID proof documents.
How is this information obtained?
Credit Reports are sourced from a computerised database system known as the Central Credit Reference Information System (CCRIS) that contains credit information of about nine million borrowers in Malaysia. All banks and a variety of other participating financial institutions contribute information to the CCRIS.
Participating financial institutions may request for the credit report of an applicant from the following credit reporting agencies (CRAs) that have been registered under the Credit Reporting Agencies Act, 2010 and can access the credit information in CCRIS:
▫ Credit Bureau Malaysia Sdn Bhd
▫ RAM Credit Information Sdn Bhd
▫ CTOS Data Systems Sdn Bhd
Is there a Credit Score available with the Credit Report?
CTOS Data Systems Sdn Bhd has introduced the CTOS Score* that evaluated credit risks based on five predictive characteristics – payment history, amount owed, length of credit history, credit mix and new credit.
How can you improve your creditworthiness?
Credit Bureau Malaysia has the following tips for applicants looking to improve their credit scores:
▪ Always pay your bills on time.
▪ Keep the balance of your accounts/credit cards at or at least 35% of your total credit limit.
▪ Try to obtain a mix of credit facilities (credit cards, housing loans, hire purchase etc).
▪ Don’t apply for too much credit at one go.
▪ Keep track of your credit reports for at least 2 years.
* Data Source: The Star, March 31, 2016 | CTOS introduces credit score to evaluate consumers’ credit risks.