Home Loan with Bad Credit in Malaysia

Your credit score directly affects the approval of your home loan. Having a bad credit due to late or missed payments can cause your home loan application to get rejected.

But there are ways you can get a home loan approved even with a bad credit score. Let’s find out how.

What is a bad credit?

A bad credit refers to low credit. It indicates that a borrower is carrying a higher credit risk. A bad credit is followed a low credit score while a good credit is followed by a high credit score. Usually, lenders do not want to lend credit to a person who has a bad credit as the risk involved in it is very high. Borrowers with a bad credit may miss loan repayment or indulge in defaulting which may affect the lender.

A lot of factors such as your payment history, amount borrowed, length of your credit history and payment schedule of a borrower may affect his/her credit score. Once your credit score comes down, it become very difficult for the person to obtain further credits such as car loans and personal loans etc.

How to Get a Home Loan with a Bad Credit Score

  • Approach non-banking institutions and licensed money lenders

    If your home loan application is denied by banks, you can still fulfil your dream of owning a house. You can approach financial institutions with your request of a loan. You can also get a loan from licensed money lenders. However the loan amount obtained via these channels will come with higher interest rates. Most of these institutions may require you to pay off your existing debts.

  • Guarantor loans

    Another way of getting a home loan approved with a bad credit score is to get a loan via a guarantor. You can easily get a loan in the name of your friends or family members who keep a good credit score. This way you can get the home loans on competitive rates.

  • Appeal to the bank

    You can also try to get the home loan by showing the evidence of your improved financial record. You can also explain the detailed view of your dented credit score to the bank. This can improve your chances of getting a home loan. Though the loan obtainable in such a case may come with a higher range of interest rates, still it can help you own your dream house.

  • Secure your loan with a cash deposit

    In order to increase your chances of getting a home loan approved, you can deposit funds in cash to secure your loan. You can apply for up to 90% of the property’s valuation with most of the home loan packages. Going for a lower percentage of loan amount may increase your chances of obtaining a home loan on competitive rates.

  • Close your existing credit lines

    Another way you can improve your chance of getting a home loan approved is by closing your current credit lines. Although it takes at least 3 months for it to show on your credit score, but closing your existing credit lines can increase the chances of getting your home loan application approved.

  • Co-signing the loan

    If your current credit score is below average and it is causing your home loan application rejected, you can apply for a loan on jointly with your spouse. If your spouse has a better credit score, your chances of getting a home loan may increase.


It can be a little tricky to get your home loan approved when your credit score is low or below average. But there are ways you can obtain financing for building your own house or buying a property. It is highly recommended that you conduct a research on your own and explore the markets in order to find ways to obtain financing.

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