Credit Ratings in Malaysia: Understanding How Credit Scores Work

When applying for a loan, the bank will collect your personal information, such as your marital status, salary and financial status. The Bank Negara will also ultimately capture and then process this information. The Bank Negara’s CCRIS (Central Credit Reference Information System) is a computerized database which stores and then processes your personal information into a credit report. The credit reports that Bank Negara produces are made available to all banks.

Because of this process, every bank has access to your loan history with every other bank. If you do not pay a loan on time at one bank, other banks will be aware of this fact.

Understanding Credit Reports

Your credit report can be very important to you when applying for credit. This report contains a lot of detailed information about your borrowing history. It includes details concerning all the loans that you have taken out and applied for to date. This report also makes note of any late payments you have made, or charges you have accumulated. If you have been involved in a bankruptcy, this information will also be noted on your credit report.

When you apply for a loan, banks use the information on your credit report in order to determine whether you qualify for the loan. This information is also used to help banks decide how much money they will lend you, as well as the interest rate of the loan. Every bank has a specific process for calculating credit scores to determine a person’s credit worthiness.

Why Are Credit Scores Important?

Many people tend to underestimate the importance of credit scores in Malaysia. In reality, a person’s credit score can help to determine:

• Credit scores are used to determine whether a person will be approved for various loan products, such as home loans, car loans, personal loans or credit cards.
• Credit scores are used to determine the rate of interest that will be offered to a person on loan products.

In Malaysia, it can be costly to have a poor credit score. For example, if you are interested in taking out a personal loan, the bank will check your credit rating. If your credit rating is not good, it is likely that the bank will charge you a higher interest rate for the loan. In fact, if your credit rating is poor, you might find that banks will limit the amount of money they are willing to lend you. In some cases, a poor credit rating could even cause a bank
to reject your application for a loan.

If you are thinking about applying for a loan, it is a good idea to find out what your credit score is first. Your credit report can be obtained from Bank Negara by following a few simple steps.

Once you have obtained your credit score, you might discover that it is not as good as you would like it to be. Fortunately, there are many different things that a person can do in order to improve his or her credit score.

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