Having a good credit rating is always important when it comes to borrow credit from banks or other financial institutions in Malaysia. In fact, it is the first criterion that determines an applicant’s eligibility for any kind of credit applications in Malaysia.
What is a credit report or rating?
A credit report is a detailed record of your borrowings, repayment history and personal particulars. The Credit Bureau of Malaysia Credit prepares credit reports of individuals or firms in Malaysia by collecting credit information from banks and other lending institutions and send them back to the institutions via an on-line system called Central Credit Reference Information System (CCRIS). Thus, a credit report is a kind of file that contains everything that a bank needs to know about your financial history before approving your loan application. Credit ratings are prepared based on information such as how many banks account you have, how many times you have delayed your credit card bill payment, how many times bank has rejected your loan applications, how many secured and unsecured loans you have etc.
Impact of bad credit rating
People who ignore the importance of a good credit rating often pay the price for it when it comes to apply for credits. A loan applicant with a bad credit ratings has to face a lot of hassles while applying for credits in Malaysia. Banks often charge higher rate of interest for such applicants, compared to those who have good credit ratings.
Can bad credit rating be improved?
Yes, the good thing about credit score/credit rating is that it can be improved. However, it can be not improved immediately. If you have a bad credit rating, you cannot do anything to change it overnight. Improving credit rating is a process and it takes time.
Things to consider to improve your credit rating in Malaysia
Since, a bad credit rating can really ruin your possibility of receiving credits at times of your financial crisis and thus make your life miserable, it is very important you take necessary precaution to improve your credit rating over the time. Mentioned below are some of the steps you can take to improve your credit rating:
- Know your Credit rating
- Never delay your debt payments
- Pay your credit card bills on time
- Don’t opt for multiple loans/cards
- Avoid requesting for increased credit limit
- Try to be in a steady job
Always keep track of your credit ratings. It’s important you frequently check and verify your credit report to wipe out any discrepancies. You can do so by obtaining a copy of your credit report from Bank Negara Malaysia (BNM) without paying any fees. The only thing you have to do to access your report is to visit any branch of Bank Negara with your NRIC and fill an application form. The application form is also available online which you can download, fill and mail to BNMTELELINK. Next, you will receive a copy of your credit rating.
Never make delays in repaying your debts. Paying them off on time or ahead of time not only helps you save, it also helps you improve your credit rating. With disciplined and controlled spending, you can easily pay off your debts on time. Paying off debts without any delay will turn you into a serious and responsible borrower which subsequently boost your credit report and build trust between you and your lender. Delayed payments and non-payments may harmfully affect your credit history and bring down your credit score.
Always pay your credit card bills on time. Delayed payment of credit card bills not only earns heavy interest payment, it also brings down your credit ratings. We often forget to pay our bills on time and end up making unnecessary delay. So, list down your bill payment due dates and make it a habit to pay your credit card bills on time.
It is advisable you don’t opt for multiple loans and credit cards. Having multiple secured and unsecured loans and credit cards may negatively affect your credit score. Because, it implies the high amount of debt you carry with you; it will also affect your debt to income ratio. If your debt to income ratio shows that you are already overburdened, your credit rating may go down and you may not be able to receive further credits. Likewise having multiple credit cards and closing your old credit cards may also affect your credit ratings.
When you request for an increase on your credit limit, it shows that you heavily rely on your credit cards and you are overburdened. So, if you want to improve your credit ratings, don’t request for a higher limit, unless you really need it. And keep a track of your credit utilization and keep your balances low.
Being in a stable job indicates that you would be able to repay your debts on time. Since you have a steady income source, banks and other financial institutions may consider you to be a less risky borrower. This may help you have a better credit ratings. It’s like you would always want to lend money to a person who repays it on time, not to someone who skips repayment.
Since, having a good credit rating is very essential to save your loan applications from being rejected by banks, it important you don’t undermine your credit ratings and constantly keep a track of it to avoid having a bad credit rating. The above-mentioned steps would definitely help you improve your crediting rating.