Credit history or better known as credit report is a statement to record an individual or a company’s credit activities that include late payments and bankruptcy. In certain cases, credit report is also known as credit reputation and credit score in Malaysia. The statement records all the past activities and loans as well as balance in the account. Based on the statements and records, individuals can check how regular they settle the payments. You can also check with Bank Negara if there is any action taken against you for overdue bills.
Generally, credit reports originate from a company known as consumer reporting agency (CRA) that collects and sells your credit information to relevant firms. The information gathered would be stored in database and would be sold over to firms for a fee. Bank Negara Malaysia’s Credit bureau is a common type of CRA. These credit bureaus either operate nationwide or smaller companies that serve specific local markets. Based on your credit report, companies can draw credit rating that summarizes your past borrowing, charging and repayment activities in Malaysia.
Good credit rating assists you in reaching specific financial goals while on the other hand, poor rating reduces your financial opportunities. Credit report is extremely important as it determines whether you have the financial ability to buy properties in Malaysia, protect your credit ratings by paying bills and making loans and to limit the debts more than the amount you can settle.
Information in credit report
The information collected by credit bureaus can only be provided to certain parties – government agencies and departments to review your financial status, creditors who are considering granting you loans, insurers who are considering offering you an insurance policy as well as employers who are considering you for employment and promotion. On top of that, court can also request for such information and reports from the bureaus as evidence to support the cases. For third party who are seeking your credit information, they need to write and submit a letter stating the purpose and request for permission to obtain these private information.
Credit reports contain four types of information which are your personal details such as current and past employers and basic information about your family and spouse; credit information including your bank accounts, credit card issuers, loans and most importantly, how regularly you settle your payments in the past two years; public record information and lastly, recent inquiries (list of individuals who have obtained your credit report in the past two years).
Obtaining your credit reports
Malaysians can request and obtain your credit report directly from Bank Negara by following the right procedures and submit copies of original documents for verification purposes. For those who are staying in Klang Valley area, you can obtain your credit information directly from the Khidmat BNM (LINK) of Bank Negara Malaysia located in Jalan Dato’ Onn. Just remember to bring along your driving license or passport for verification purposes. You may obtain the report during the visit.
On the other hand, for those who are outside of Klang Valley area, it is best to apply your credit information by completing and submitting all the forms to BNM Telelink Bank Negara Malaysia. Among some of the documents to be completed are credit report request form (CRR), loan declaration form, photocopy of your MyKad, driving license, water bill, electricity bill, credit card statement, bank account statement and EPF statement.
If you are representing your company or requesting the information of a deceased, you are required to present other relevant documents such as authorization letter issued from the company, certified true copy of Company Registration Certificate and List of Directorship of Company, copy of death certificate, copy of Letter of Administration and a copy of identity card of the administrator. Since you are requesting the credit report on behalf of other party, it takes about 2 to 4 weeks to process your request before you can obtain the statement.
Interpreting your credit report in Malaysia
If you still have no idea what is a credit report, it is basically a statement to relay the history of your dealing with creditors. Creditors can understand and study your credit activities for the past six months based on the inquiries, open credit accounts, missed payments, maxed out credit lines and debts. Here are some of the details you need to know – whenever you apply for a credit card, it will be recorded automatically to your credit report. When your lenders or companies see these information, they’ll think that either you need a lot of credit or planning to take a debt.
Meanwhile, open credit account is also another important information for lenders to evaluate your financial status. It is advisable for you to keep between four to six credit cards to ensure you can keep a balance debt and credit score. A reminder for all- do not miss any payments. Even if you do not have sufficient amount of money to settle the debt, at least make the minimum payment to reduce the total amount. Never ever max out your credit card because if you do so, your lenders will assume you are incapable to manage your finance and in deep trouble.
Establishing good credit history in Malaysia
Once your lenders obtain your credit report and eventually find out that you do not have a good credit history, it can be difficult for you to apply for credit cards or obtain any type of loan. In order to be eligible for a loan or credit card, first of all you need to set straight and establish a good credit history. In other words, establishing a good credit history is important if you are looking forward to make purchases or start a business. Here are some practical steps for you to set straight and rebuild your credit history.
The first step is to apply for your credit report and find out which accounts are shown in the report. Then, make it a habit to request for your credit report at least once a year to examine your past credit activities and take note on unnecessary payments or debts that will make your history look bad. Ensure that the information shown in the report is accurate. After taking time to evaluate and read your personal credit report, it is time to act by paying the bills on time. If you do not have sufficient money to settle the bills in one go, make sure you pay at least the minimum amount stated. It is crucial not to max out your credit cards as it will reflect poorly on your financial status and your ability to handle your money. Finally, cancel credit cards you are not using to avoid unnecessary spending.