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‘Tis the season of college graduation in Malaysia and at various university convocations all across the country, fresh graduates are tossing their convo caps in the air and getting ready to face the world.

Congratulations, graduates! You are now off to a new chapter in life. So you plan to get your dream job, save a bunch of money, marry your college sweetheart—you are such an adult now!

You will also have huge financial responsibilities now: a student loan to pay off, buy that cool hybrid you’ve always wanted to drive, get a credit card (or two) for emergency spending such as shoe shopping, and at some point in your life, you WILL consider buying a house.

And when applying for that quarter-million-ringgit home loan (if not more), a vital factor will come into play: your credit history.


How well do Malaysians know their credit? (from: iMoney)


What is a credit score?

For those of you with your heads buried in exam papers all these years, firstly, welcome to adulthood, and secondly, a credit score is your three-digit identity in the financial world—it reflects upon your responsibility as a borrower and your ability to pay debts such as student loan and credit card bills.

Essentially, a credit report is a summary of your financial activities, creditworthiness and loan eligibility, and contains information such as outstanding credits, approved credit application in the past 12 months, as well as pending loan applications.

The report typically comes from two sources: CCRIS and CTOS. The Central Credit Reference Information System (CCRIS) is managed by the Credit Bureau of Bank Negara Malaysia, and it collects credit information from financial service providers (e.g., banks) and compiles an individual’s 12-month credit activity report.

Meanwhile, CTOS Data Systems Sdn Bhd, or simply CTOS, is a private company that provides credit reporting from information gathered from various public sources:

• National Registration Department

• Malaysia Insolvency Department

• Companies Commission Malaysia

• Publications of legal proceedings and notices in newspapers and government gazettes


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CCRIS credit report contains information such as outstanding loans, summons or bankruptcy filings, while a CTOS credit report may also include legal actions and an individual’s business exposure and business ownership. In brief, CCRIS reports on whether you a good paymaster and CTOS reports on whether you have loan risks.

There are also two other sources of credit reporting: RAM Credit Information Sdn Bhd (RAMCI), which in 2015 opened its new market division to serve individual consumers in 2015 and uses its own credit score called i-Score; and Credit Bureau Malaysia, which originally assists small businesses but, following the enactment of Credit Reporting Act 2010, has expanded its market to include helping individuals . Most financial service providers, nevertheless, use CCRIS and CTOS.


(source: CafeCredit.com)


Why is my credit score very, VERY important?

Your credit score follows you for life. Everybody and their mommies and aunties have one. For you youngsters, moreover, these following numbers are very alarming: according to Bank Negara, 47% of Malaysian youths have high credit card debts while 38% have taken personal loans. Every day, an average of 60 young Malaysians declare bankruptcy, with those between age 25 and 44 forming the biggest group in the whole country (60%) being classified as financially insolvent.

Your credit report is like your browser history, except you can’t wipe it clean so easily. Banks and lenders will use your score to help decide on whether to lend to you, how much to lend you, and how much interest to charge you. Having a low credit score can mean that you have unsettled debts or payment delinquencies, which paints you as unqualified to handle a debt. Having a good credit score shows that you are financially responsible and creditworthy.

So if you want that dream home—and if like most of us, mommy and daddy aren’t buying a penthouse condo unit as a graduation gift—or if you aim to make money by investing in real estate at some point in your future, then it is highly important that you always maintain a good credit history.


No credit is just as bad as terrible credit

So cash is king in your world. You don’t pay with plastic. You are debt-free. You don’t need any freakin’ credit.

Contrary to popular opinion, perhaps even counter-intuitively, not having any loans or credit cards at all is actually BAD for your credit score because banks will not have any track record of your past repayment behaviour and, in fact, they would consider a lack of credit history as a negative point.

Unless you have loads of jewelry and some million ringgits stashed in secret luggage bags somewhere, you will need to apply for a home loan. You may have the down-payment, you may even have the disposable monthly income to service the loan, but a blank credit history means you are just as risky a bet for the banks.


Build a credit history with small loans

You’re just starting off in the world, so banks have little to no reason to trust you with their money. The good news is that once you hold a steady stream of income, lenders will start to warm up to you as their potential customer.

If you don’t have any credit, most financial counsellors will advise you to start with a low-limit credit card or department store card. Do apply for one. While it’s tempting to splurge with the new-found plastic money, remember that it’s there to build your credit. So always pay the bill on time and please don’t max out your credit line for that duit hantaran.

If you already have a loan under your name, such as your PTPTN loan, then build a good credit history by diligently making the monthly payments, unlike some PTPTN freeloading idiots. Banks want to see that you are a good paymaster, so try not to give them reasons to doubt your home loan application.


But I still can get a home loan, no problem, right?

Unfortunately, many housing loan applications are rejected due to insufficient, or otherwise outright horrible, credit score.

Banks are still keeping stringent guidelines on lending, resulting in total loans applications for the purchase of residential property decreasing by 3.1% in the first half of 2018 as compared to 1H17, while the approved loan fell by 0.2%. Loan rejection rate is still high among applicants of even properties priced at RM500,000 and below.

Hence, this bears repeating again: it is very important that you keep your credit history clean. You are also advised to check your credit report every year in order to maintain the good score and to avoid rampant cases of identity theft these days.

You can receive a free copy of your CCRIS credit report by visiting Bank Negara’s offices, and you will need to bring your MyKad and other documents verifying your identity. An eCCRIS service is also available, but you will still need to request the 6-digit PIN and verify your identity at BNMLINK Kuala Lumpur, BNM Offices or AKPK branches.

Your CTOS credit report meanwhile can be obtained through MyCTOS, and it is free for the basic report. You will have to register first, and your CTOS User ID will give you anytime access to your credit report either online and through the CTOS app.

Good luck!

If you could go back in time, what would your financial advice be to your younger self? If you are a young homebuyer, what was your financial experience? Share your thoughts in the discussion section below.

(By Syamil Zahari)


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wow! thanks for sharing, this is very very useful!