If you have ever applied for loans, you might have heard about this term that gives quite a headache to some people - “credit history”. The bigger the loan that you’re applying for, the stricter banks are going to be when they analyze your credit history. But what exactly is credit history?
A History of Credit
Your credit history is a record of the credit accounts you hold along with details about those accounts including: the type of account, your responsibility on the account (e.g. whether you were a joint borrower), the credit limit or amount of the loan, the current balance, minimum payments made, whether you’ve made any late payments, and the current account status.
Credit history is what helps a bank determine if you are eligible for a credit card or a loan. A missed payment or two might be okay, but if your credit history leaves a trail of missed payments, your chances of getting an approved application will be a lot lower.
The importance of a Credit Report in your financial applications
Your credit history is compiled into a single document known as a credit report. The companies who maintain your credit report are known as Credit Reporting Agencies (or CRAs) or credit bureaus.
Malaysia has three main CRAs, governed under the Credit Reporting Agencies Act 2010 and registered to the Registrar Office of Credit Reporting Agencies. These CRAs are:
- Credit Bureau by Bank Negara Malaysia; that manages the Central Credit Reference Information System (CCRIS)
- CTOS Data Systems; that issues MyCTOS Score Report
- RAM Credit Information (RAMCI); that issues the RAMCI Personal Credit Report
What each report says...
The CCRIS report highlights your unpaid loans and any loans or credit card applications that you have made in the past year. These records are profiled across a network of financial servicing companies in Malaysia. As such, any unpaid utility bills, insurance premium payments, and banking records that you have may be brought to your attention via the CCRIS report.
CCRIS further includes any outstanding loans, summons or other forms of unpaid credits that you have accumulated in the past year. If you have any credit facilities that are being monitored closely by financial institutions, these special attention accounts will also be listed in this report. If you have applied for loans or credit cards in the past year, these applications will be listed too, whether pending or have been approved. Last but not least, CCRIS will show whether a person has been declared bankrupt.
Try not to have a negative perception of the CCRIS! Aside from these seemingly-negative information being displayed, CCRIS will make sure that any positive credit information is also displayed in the report. This includes everything from your credit approvals to your timely credit repayment history.
Cost: Free for MyCTOS Basic Report, RM25 per report for MyCTOS Score Report and RM99/year for CTOS SecureID
While CCRIS derives its factual information mostly from financial networks, CTOS obtains theirs from public sources. These sources include the National Registration Department, Companies Commission Malaysia (CCM), the Malaysia Insolvency Department, as well as any publications of legal proceedings in which you have appeared.
The CTOS report will contain legal notices, your bankruptcy information, and some details on your business or your role in a business. In the case where there has been legal action taken against you, the case status may be updated in the CTOS credit report too. Since these information are available to the public indefinitely, any information contained within this report dates back much longer that of CCRIS.
CTOS has their own scoring system, which you can get when you apply for a MyCTOS Score Report and will include CCRIS report as well. And for further protection, the CTOS SecureID subscription will alert you the changes in your credit facilities.
Cost: RM10.60 per report for PCRB, RM15.90 per report for PCRP and starting from RM53.00 for a 1 year subscription of JagaMyID
The contents available to you in your personal credit report can vary depending on which credit report by RAMCI you sign up for. RAMCI allows individuals to choose between Personal Credit Report Basic (PCRB) and Personal Credit Record Plus (PCRP). Both credit reports contain the RAMCI credit information and information derived from ANGKASA Salary Deduction System (SPGA). RAMCI credit information is derived from its business partners and public sources, while the SPGA information is only available for public servants.
The unique offering from RAMCI is the development of their own credit system, known as the i-Score System. The i-Score rating is available for PCRP and My Credit Watch reports from RAMCI; it is a 3-digit scoring system that reflects the likelihood of you repaying your loans on time. The higher the score, the lower risk you pose for banks and financial agencies that you might take a loan from.
PCRP also contains your banking credit information on top of the i-Score reporting system, legal or bankruptcy proceedings and credit records from non-banking industries. An additional identity protection plan called JagaMyID even monitors your credit profile daily and sends you alerts for potentially suspicious credit activities - such as credit card applications or loan applications made in your name. This report will also contain information on individuals or parties that has made enquiries about you and your credit history, so you can ensure that you are only providing information to parties that you recognize.
Opt for More Than One Credit History Reporting System
Essentially, these three credit history reports contain different types of information - each with their own unique points. If you are applying for your own credit history report, it would be wise to apply from more than just a single source.
When you obtain at least two forms of credit history report, it will be easier for you to spot any inaccuracies or inconsistencies. Fixing any of the issues that appear can also help to make your credit history report more reliable for any financial institutions to screen through easier. If you are planning for financial commitments, applying for a financial product, or you just want to know your financial health, consider applying for credit history reports this year.