1. Being Late on Your Credit Card and Loan Payments
By far the most prevalent reason. Late credit card and loan payments are reported by banks to the Credit Bureau of Bank Negara and stays in CCRIS for a period of twelve months. This includes PTPTN loans.
Thus, make sure you clear outstanding debt promptly by setting up automatic payments and closely monitoring all your credit card bills and loan instalments.
2. Replacing Your NRIC Too Many Times
Did you know that every time you replace your Malaysian Identity Card (NRIC), a number on the back of your NRIC indicates how replacements you have had? Having too many replacement NRICs can hurt your credit score, as lenders might view you as at risk for fraud.
Then again, you will be an easy target for identity fraud. Some but not all company like RAMCI provides an identity protection plan. At least you’ll get a personal peace of mind.
3. Owing Money to Telcos, Utilities & Banks (Even parking summons!)
When an account goes into default, regardless of the amount owed, many telcos, banks, and utility companies will remark on a person’s record with credit reporting agencies like RAMCI. Some common reasons include:
- Unused bank accounts not having enough money to cover the service charges
- Owing telco’s small amounts of money after service has been terminated
- Unpaid parking summons
People have been known to get blemished records for owing amounts as low as RM10. And these can hurt your credit score. So it pays to be vigilant and settle these amounts, no matter how small.
4. Being Completely Debt Free
This may seem counter-intuitive. But contrary to what some people think, not having any loans or credit cards at all is actually bad for your credit score. This is because banks will not have any track record of your past repayment behaviour. Lenders consider a lack of credit history as a negative point.
Should you fall into this category, this can be easily remedied by applying for a credit card online.
5. Having High Credit Card Utilization
A general rule is to try to keep credit card utilization ratio below 70% of your combined credit limit. Anything beyond that tends to upset your credit score. One trick people use is to have multiple credit cards. This increases their combined credit limit and lowers their overall total credit utilization ratio.
6. Having Too Many Credit Cards
But having too many credit cards can also be harmful to your credit score. The general rule is that 3 cards from different banks is safe. Beyond that, the more you have, the more risky you are as perceived by banks.
7. Standing as Guarantor
Be cautious when standing as a loan guarantor to friends and family because if they default or delay payment, you will be liable for the debt as well. This means, your credit score could be affected just as much as someone who fails to make repayments on borrowings and might remain as such until all arrears are cleared.
8. Applying for Excessive Number of Facilities Simultaneously
While it’s advisable to shop around when applying for a loan, it’s not advisable to apply for too many credit facilities at the same time. This is particularly true of personal loans and credit cards because the practice of aggressive loan and credit applications may indicate desperation to obtain funds.
It’s always best to research and plan out your loan applications first than to make multiple applications indiscriminately.
9. Undergoing Debt Restructuring / Rescheduling, or Taking a Payment Holiday
Restructuring, rescheduling your loans or requesting a payment holiday from banks will cause banks to apply a special status tag to your CCRIS record. While it might save you some money, such measures are only recommended as a last resort. Having a special status in your CCRIS record is very harmful for your credit score and significantly affects your chances of getting a loan in the future.
10. Bouncing Cheques
Writing cheques that bounce will cause you to be placed on the DCHEQS system. DCHEQS is a system used to keep a history of dishonoured cheques issued by people. Being on this list will hurt your credit score.
11. Not Actively Managing Your Credit Profile
More often than not, negative credit scores persist because you haven’t checked and aren’t aware that a problem even exists. There could be late payments or legal actions against you which you never knew about, or outdated information on your records. It is not uncommon for legal disputes or debt that has long been settled to remain un-updated in these systems. Therefore, it is important for everyone to know what their own credit profile and to manage it actively.
If you, like many other Malaysians, are wondering how to manage your own credit profile, the first step is to obtain a copy of your personal credit report which you can get for free from My Credit Info by RAMCI, a leading credit reporting agency in Malaysia.
With this information, you can then take control of your credit profile and take the necessary actions to improve your score.