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  • How To Improve Your Credit Score In Malaysia

    Ways to Increase Your Credit Score Before Applying for a Credit Card

    Now you understand that knowing your credit score can help you choose a better credit card. But if you incorporate certain finance behaviour and lifestyle changes, you can boost your credit score and get a better credit card. Let us see how:

    6 steps to raise your credit score

    1. Start working in advance
    2. Start working in advance
    3. Credit utilisation
    4. Stay on track with your loan instalments
    5. Don’t take multiple loans at a time
    6. Make sure that your personal information is valid and up to date
    • Start paying your monthly dues in time.
    • Settle your loans before applying for a credit card.
    • Do not apply for multiple loans at the same time.

    If you already have a credit card and you are looking for another or an upgraded card:

    • Pay your monthly credit card bills in full amount. Try not to pay only the minimum applicable sum. This way, you can end up losing on your interest rate savings that are made within the grace period of 20 days on your card.
    • Do not apply for multiple credit cards at once. If you are already holding one card, study your credit score and financial status, and based on that, choose a card that you can obtain effortlessly.
    • Do not drain out all your credit limit. This will affect your credit score and will make it difficult to get another credit card.
    1. How To Improve Your Credit Score In Malaysia

      Start working in advance:

      You need to contribute to your credit history as early as possible if you are eyeing a loan facility or thinking to get a credit card in near future. Start working few months in advance to build your credit score so that you won’t have to face any rejections during credit assessment.
    2. Pay off your bills and debt:

      Your payment history contributes to 35% of your credit score and this is why it is important to pay of your pending credit card and loan instalments on time. Ensure you pay at least the minimum amount due on your credit card bills on or before the payment due date.
    3. Credit utilisation:

      If you already have a credit card, make sure that your utilisation is limited up to 30% of your credit limit. This will help you enhance your credit score. The more credit you utilise, the more it signifies to the bank that you are credit hungry and it can have a negative impact on your credit scores.
    4. Stay on track with your loan instalments:

      Do not miss any instalment payment. If you are failing to make a repayment, inform your bank and try to get an extension for it. Repeated instances of missed or late payment on your instalments will end up damaging your credit rating.
    5. Don’t take multiple loans at a time:

      Not only does it have a negative impact on your debt servicing ratio, it also implies to banks that you are credit-hungry and cannot manage finances effectively leading to a poorer score and hurting chances of any further applications from being approved. You will also face a harder time keeping up with the payments.
    6. Make sure that your personal information is valid and up to date:

      Having an incorrect address listed with a bank or financing institution can have a negative impact on your credit score. When you relocate or move your residence, make sure you inform companies about it. Having multiple addresses listed on your file will only lead to further confusion and lower your credit score.

    While making changes to your payment behaviour and instilling financial discipline will not guarantee approval of any credit card or loan application, it will definitely improve your chances.

    What is a Credit Score

    Credit score is a number that describes your credit repayment behaviour. It also contains information and details regarding your existing debts and on your bank accounts. In Malaysia, credit score is recorded by government-appointed agencies such as Central Credit Reference Information System (CCRIS), Credit Tip-Off Service (CTOS), Credit Bureau Malaysia, and RAM Credit Information Sdn Bhd (RAMCI).

    Why Credit Score is Important While Applying for a Credit Card

    Getting a credit card is not as easy as it sounds. You need to pass through a set of eligibility criteria and provide all the required supporting documents to get a card. Moreover, you also need to go through a thorough credit assessment done by the respective bank to qualify to get a credit card.

    Let’s take a look at how your credit score can be responsible for your credit card application and how can you increase your chances to get a credit card in Malaysia.

    Why You Should Apply for a Credit Card Based on Your Credit Score?

    • It is important to apply for a credit card based on your credit score to maximise your chances of getting an approval. Before applying for a card, if you already know that you have a healthy credit score, this will save you the unnecessary concern regarding the potential rejection.
    • After getting a credit card on an average credit score, you can build your credit score by paying off your monthly dues. This will gradually make you eligible to hold an upgraded credit card with better benefits.
    • If your credit score ranges between good and excellent, you will have many options of credit cards available from various categories such as cashback, reward points, travel, and petrol.
    • Knowing your credit score helps you to set a long-term goal for your credit.
    • It also helps you get a credit card easily when you apply for a right one, keeping your credit score in mind.
    • Moreover, if you know your credit score, you can filter your credit card preferences and shortlist the ones which are most suitable for you.

    What to Do If Your Credit Card Application Is Rejected

    • The most import thing to do after your credit card application gets rejected is to analyse. Learn why you have failed to get an approval by going through the bank’s rejection letter. If it is not stated there, self-analyse your application to find out the reason.
    • Reasons behind a rejected credit card application can be low income, a wrongly-filled application form, insufficient paperwork, low credit score or a high debt-to-income ratio.
    • Next thing you can do after facing rejection is to clean up your credit report. Every bank will check your credit report before granting you a new credit card and thus, you have to study your credit report to rectify things.
    • Lower the ratio of debt-to-income. Make your repayments, cut down on unnecessary spending and you can also consider a 0% balance transfer facility on your (already existing) card so that you can pay off your balances quickly.
    • Last but not the least, once rejected, do further research and apply for a right credit card based on your requirements and eligibility. This will reduce your chances of another rejection.

    Things to Keep In Mind

    • Know your credit score before applying for a credit card. In Malaysia, there are main 4 credit companies that derive your credit score: Central Credit Reference Information System (CCRIS), Credit Bureau Malaysia, RAM Credit Information Sdn Bhd (RAMCI), and Credit Tip-Off Service (CTOS).
    • Following factors are responsible to determine your credit score:
      • Your payment history
      • Owed amount in the form of loans, credit card dues, etc.
      • Any new credit facility taken, etc.
    • Do not ignore other eligibility criteria such as applicable age, nationality and income criteria, etc. before applying for a credit card.
    • Do not get discouraged if your credit card application is rejected. Every bank has its own way of performing credit assessment and granting you a card. You can try applying to a different bank.

    Remember that it is essential to keep your credit score in mind before making an application for a new credit card. Also, build your credit score, to get a better card with more benefits on it.

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