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
As banks and other financing institutes consider your credit score before granting you any kind of credit, having a good credit assessment is essential. A credit score between 697 and 850 is considered as a good credit rating in Malaysia. If you have a good credit score, chances are that your loan application will be processed and approved without any hassle. But a bad credit score will prove cumbersome when you’re looking to get a loan facility. Your credit score is also an effective factor while deciding interest rates for your loans or other financial products.
However, you don’t need to feel helpless if you have a bad credit score. Below are a few ways on how you can improve your credit score.
Ways To Improve Your Credit Score
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.
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.
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.
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.
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.
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.