4 Ways A Bad Credit Score Can Impact Your Life (And How You Can Fix That)

Category: Banking & Finance

Having a bad credit score can negatively affect your financial life in the long term. It may lead to high-interest credit card debt, denial of loan application and more. In this article, we outline the four side effects of bad credit and the five ways you can fix it. Read more to find out.



Having a good credit score seems like the golden ticket to some of the best financial deals: competitive and ideal interest rates, premium credit cards, and higher chance of buying a car or getting a mortgage.

Unfortunately, the opposite effect of that aka having a bad credit score – between 300 to 650 (poor to low) according to CTOS – is equally extreme, as you might get rejected for a new credit card or mortgage, have to pay higher interest rates, or even be denied a job.

Sadly, there also often tends to be a stigma attached to those who possess bad credit. But having bad credit doesn’t equate to one being fiscally irresponsible, because life happens, sometimes, either in the form of medical bills or other unexpected emergencies, and could put us in difficult financial positions. Other times, it’s our ignorance or lack of knowledge on credit scores or its reports that end up hurting us.

So with that said, we wanted to make it a point to say that it’s never too late to right the mistakes of the past, which in this case means improving a bad credit score.

So before it’s too late, here’s a rundown on the 4 ways a bad credit report can impact your life and the steps you can take to improve it.

But first, what is a credit score?

In a nutshell, a credit score is a number between 300-850 which represents your creditworthiness and how likely you are to repay debt.

Believe us when we say that these are the three most important digits of your life.

If you didn’t already know CTOS is one of the three main Credit Reporting Agencies governed under the CRA Act 2010. They’re also registered to the Registrar Office of Credit Reporting Agencies, so you know they’re the real deal. 

The reason why a credit score is so important is because it gives banks and lenders a better sense of how financially healthy you are, and how likely you are to repay your debt.

Because giving out loans means putting the receiver in debt, financial institutions can’t be giving out loans without first making a thorough assessment of your financial health.

To do this, banks and lenders would check up on each person’s credit score. The higher the score, the higher the chance of getting financing requests approved. Having a good credit score is good for you because this means you’ll have more options to choose from, as more banks and lenders will prefer dealing with you.

So if your score isn’t quite at the optimal level, we advise you to put in the effort to improve your score, because over time, it may even delay your retirement plans and costs you more money, too.

1. Have a hard time securing a mortgage or rental

If you’re aiming to make your first home purchase at a certain stage in life, better be sure that your credit score has improved by then as a poor score may reduce your chances of securing a home loan.

Similarly, if you’re looking to rent, be sure to polish that score because landlords tend to prefer tenants who have good credit scores. So if your credit history isn’t that great, work on improving it or you will miss out on the home you want.

In these difficult times, landlords are also more likely to trust tenants who have a good track record of paying rent, bills and debts on time, hence why it’s not uncommon for them to vet potential renters.

Although we will advise you to work on improving your score, a short-term solution to this if you are in need of a rental is find places from small-time residential property owners. The long-term solution is to reassess your finances and work on improving your rating.

At the end of the day, whether your application as a tenant is successful depends on how trustworthy you are perceived by the landlord. The solution would be to delay your purchase until you’ve built up your credit.

2. Getting approved for a loan or credit will be difficult

Having a bad credit will also directly affect your chances of securing approval for a new loan or credit application from mainstream funders. The lower your score, the less likely you are to find a willing lender as they are not willing to take the risk on you.

And unfortunately, this scenario is what usually drives unqualified loan applicants to seek lending from less-than reputable sources like loan sharks, pawn shops and payday loans, and end up putting their own life at risk or risk getting into further debt.

Not being able to secure financing is bad news to you because you’ll also miss out on perks of having a personal loan to finance things like debt consolidation, extra money for your wedding, to buy certain costly electrical appliances or that dream house renovation.

The fact of the matter is banks lend you money to make money, hence they are forced to only lend to those who can pay them back.

Oh and did you know that a failed application will show on your records, and will further hurt your chances of getting approved for another credit card, for at least the next 12 months?

This fact alone should motivate you to improve your score. Avoid frequent late payments for your other cards or loans, and ensure that you keep your debt-to-income ratio low not exceeding 60%.

3. Less than competitive rates, meaning paying more for your loan

Though having a bad score may not fully prevent you from securing a loan, it may mean that you won’t stand a chance to get more competitive and favourable rates.

Despite getting approved for your application, a bad score could mean you get offered a lower margin of finance and/or with higher interest rates. These figures, could sometimes, come up to thousands of Ringgit over time!

Another perk of having a good credit score is it helps you bank with more reputable institutions.

4. You may experience trouble getting a job

A study has shown us that there’s little if any correlation between employee credit and job performance, that however, doesn’t stop employers from looking up the credit of prospective employees during the hiring process.

Therefore, things like bankruptcy, delinquencies or an inclination of racking up huge debts could put you in a tricky spot when you are looking out for a job.

The truth is many companies still perform credit checks on potential employees as part of their background check. Other companies may perform these checks on employees who are considered for promotions, too.

In fact, we read that financial background checks are especially common with public-listed and multinational companies, as well as government-linked positions that are heavily involved with cash, corporate finance and bank accounts, client accounts and data, and financial IT software and systems.

So it would be in your best interest to maintain a good, if not healthy score, to avoid it backfiring or hurting your chances at advancing your career development. This is particularly true if you are in urgent need of a job.

Related: How Malaysians Can Check And Improve Their Credit Score

Although we’ve written about this before, here’s a quick summary of the five things you can do to improve your credit score!

Here are 5 ways you can fix a bad credit score!

1. Update your personal information

It may sound simple, but updating your latest personal information, like outdated residential addresses, can really make a difference, and help you take out a loan! So, check and make sure that credit reporting agencies have your correct and updated details.

2. Get out of debt

This may sound hard for some, but the next step is to put in effort not to default on your debts. Though it’s easier said than done, you gotta start somewhere right? And it’s never too early to start on your repayment. If you need to, contact your lender to see if you can amend your repayment schedule.

3. Pay your bills on time

As your payment history makes up 45% of your score, strive to pay your bills, including phone, power, and electricity bills, among others, on time. For those who need a reminder on this, get a calendar or automate your payments. Missing payments will not only affect your credit score – you’ll have to pay penalties and late fees too!

4. Check your financial relationships

Who you trust with your money or other crucial parts of your life matters. Have you agreed to be someone’s guarantor? Are you sharing bills with someone else? Do you have a supplementary credit card? Be super mindful of your financial relationships with others, as their poor repayment habits can bring down your score too.

5. Build up your credit history

Lastly, remember that having no credit score at all is just as bad as having a bad credit score. If you haven’t yet, consider getting yourself a credit card, of course after knowing what you’re signing up to start building on your credit history.

So, do you need to check your credit score?

Well, now you can do so for FREE! 

As part of their efforts to help Malaysians better understand their financial positions, CTOS is giving out free MyCTOS Score reports to the first 50,000 Malaysian customers for a limited time (till 31 December 2020).  

Terms and Conditions:

  1. Valid from 27 October 2020 – 31st December 2020 and limited to 50,000 customers.

  2. Each individual is entitled to ONE (1) free MyCTOS Score report only.

  3. To redeem your personal MyCTOS Score credit report, you need to sign up for a CTOSID account.

  4. Existing CTOS customers who have redeemed a complimentary MyCTOS Score report before (either directly via CTOS or via our partners) are NOT eligible for this free score.

  5. The redemption of complimentary score report using the promo code CTOSCH20 is only available online via CTOS website. Not available on mobile APP. Full terms & conditions, visit CTOS website at www.ctoscredit.com.my

Here’s the step-by-step on how to redeem the free report:

For new users:

  1.   Click here to get to CTOS website or download CTOS mobile app
  2.   Sign up for a CTOS ID 
  3.   Once verified, login to your account
  4.   Click on the “Buy latest MyCTOS Score report” button 
  5.   Key in the promo code CTOSCH20 at the checkout page
  6.   Instantly view your credit report and score.


For existing users: 

  1.   Login to your account here
  2.   Click on the “Buy latest MyCTOS Score report” button 
  3.   Key in the promo code CTOSCH20 at the checkout page
  4.   Instantly view your credit report and score.


The CTOS Score is a full credit report with your current CTOS Score and CCRIS details.

What’s in it:

  • Everything in MyCTOS Basic Report
  • CTOS Score
  • CCRIS Records (BNM)
  • Access to rewards