Credit report is important in personal finance. It will affect whether you get a loan, and at what interest rate. In this article, let’s find out what is a credit report.
What is a Credit Report?
A credit report is a detailed document that contains information about your credit history, including loans, credit card accounts, and other debts. It also includes details about your payment history, outstanding balances, and the length of your credit history. Banks, financial institutions, and other credit providers use this report to assess your creditworthiness when you apply for credit.
Key Components of a Credit Report
1. Personal Information
This includes your name, identification number, address, and date of birth.
2. Credit Summary
An overview of your credit accounts, including the type of credit (such as credit cards, and personal loans), credit limits, outstanding balances, and payment history.
3. Credit Inquiries
A record of who has accessed your credit report. This includes applications for credit cards, loans, and other forms of credit.
4. Public Records
Information on any legal judgments, bankruptcies, or tax liens.
Credit Scoring in Malaysia
In Malaysia, credit scores are numerical representations of your creditworthiness. The scores are calculated based on the information in your credit report. A higher credit score indicates a lower risk to lenders, which can result in better interest rates and terms when applying for credit.
The credit reporting agencies use a scale of 3 digits to indicate the risk. For example, Experian i-Score starts from <360 to >741, indicating different risk level (click here for more information regarding i-Score). The higher your score, the better your chances of being accepted for credit, at the best rates.
Accessing Your Credit Report
Individuals have the right to access their credit report. You can obtain your report by contacting the credit reporting agencies directly. There may be a fee for obtaining your report, and you will need to provide identification and other personal information to verify your identity.
In Malaysia, the primary credit reporting agencies are the Credit Bureau Malaysia (CBM) Sdn Bhd., CTOS Data Systems Sdn Bhd, and Experian Information Services (Malaysia) Sdn Bhd. These agencies collect and maintain credit information on individuals and businesses, which is then used to generate credit reports.
Dispute Resolution
If you find errors or inaccuracies in your credit report, you have the right to dispute them with the credit reporting agency. The agency must investigate the dispute and correct any inaccuracies.
Maintaining a Good Credit Score
1. Pay Bills on Time
Late payments can negatively impact your credit score.
2. Keep Balances Low
High balances relative to your credit limits can indicate high risk.
3. Limit Credit Inquiries
Each time you apply for credit, it can result in an inquiry on your credit report. Too many inquiries can lower your score.
4. Monitor Your Report
Regularly checking your credit report can help you identify and correct errors quickly.
Central Credit Reference Information System (CCRIS)
If you do not want to spend money to obtain your credit report, you may get Central Credit Reference Information System (CCRIS) instead. CCRIS is a report or statement of all your credit/loans with the bank. All your credit records with the bank is in a brief report. It is one of the components of the credit report and the bank will use this CCRIS report to evaluate or assess your loan eligibility.
Via this CCRIS report, you may also view your payment records with the bank. If you often pay by the due date, which is before the deadline, your records will be ‘0’ each month. The number ‘0’ indicates that you have never made late payments to the bank. However, if you make a payment after the due date, your monthly report will indicate ‘1’ to denote that you paid late for one month, ‘2’ if you paid late for two months and so on.
How to Access the CCRIS Report?
To review statements, visit the official CCRIS website (click here). Click the Register Now button on the left panel. Follow the instructions provided to complete your registration. It involves an one-off RM 1 transfer to a designated Bank Negara Malaysia account that will be automatically refunded within two (2) working days.
You may refer to this PDF for the detailed steps (click here).
Conclusion
Understanding your credit report and score is essential for managing your financial health. By keeping your credit report clean and your score high, you can improve your chances of getting approved for credit and enjoy better terms on loans and credit cards.
How can a financial planner help you?
I can help you to make sense of your credit report. We will also explore ways to improve your credit score. Since your credit score is closely related to the debt(s) you owe, we shall develop a debt management plan. If your circumstances warrant it, I will also refer you to the appropriate party to help you.
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Disclaimer: This post is for informational purpose only. You should use judgment and conduct due diligence before taking any action or implementing any plan suggested or recommended in this article.
