Subscribe to Our Newsletter

We know you love savings. Sign up for more!

11 Things You're Doing That May Hurt Your Credit Score

BY Team Loanstreet

Updated 10 Feb 2023

Follow Loanstreet on Facebook & Instagram for the latest updates.

Okay, first of all, what is a ‘Credit Score’ and why is it important?

Your credit score reflects your creditworthiness to banks. A good credit score could mean enjoying better credit terms and better interest rates. On the other hand, a bad score could shut you out from banks ever extending a loan or issuing a credit card to you.

It takes years to build a good credit score, but it can all be undone very easily. In fact, many of us hurt our own credit scores without even knowing it!

Here are the top 11 most common ways Malaysians hurt their own credit scores.

What's covered in this article?

1. Being Late on Your Credit Card and Loan Payments

Image source: Credit Cards Canada

By far the most prevalent reason. Late credit card and loan payments are reported by banks to the Credit Bureau of Bank Negara and stay 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

Image source: Budak Bandung Laici

Did you know that every time you replace your Malaysian Identity Card (NRIC), a number on the back of your NRIC indicates how many 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 personal peace of mind.  

3. Owing Money to Telcos, Utilities & Banks (Even parking summons!)

Image source: FMT

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.

ALSO READ: Types of Saman in Malaysia… and How to Settle Lah?

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 Utilisation

Image source: Money Management International

A general rule is to try to keep your credit card utilisation 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 utilisation 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 are safe. Beyond that, the more you have, the riskier you are as perceived by banks.

7. Standing as Guarantor

Image source: DNA India

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 an 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

Image source: MoneyWise

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 to 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 Dishonoured Cheque Information System (DCHEQS). 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

Image source: Relevan

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 that 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 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.

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

Continue reading...

About the Author

Team Loanstreet

Run by a professional human-sized team, get resourceful tips & guides from our very own library of financial articles that can help improve your financial lifestyle & make a well-informed money decision. We strive to provide you with the best service in helping you to get the most out of that DUIT!


Suggested Articles

Here are the Best Fixed Deposit Promos in Malaysia 2023

Best Fixed Deposit Promos Malaysia 2024

Got Damaged Ringgit Banknotes/Coins? Don't Throw, Can Exchange

How to Exchange Damaged Ringgit Malaysia Banknotes?

3 Big Reasons Why You Should Get UOB TMRW