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Credit Card for Those with Bad Credit

Bad credit due to bad CTOS & CCRIS scores? Help’s here!

So, you need to buy something online, or you’re looking to go cashless. You want to apply for a credit card. You make your application… and then it gets rejected, because, the bank says, you have CCRIS or CTOS problems. Or, you already know that your CCRIS and/or CTOS reports will reflect badly on you. What now?

Firstly, what is bad credit?

Let’s start with what a good credit score is. According to CTOS, a score of 697 and above is considered good; and if you score as high as 850, that’s seen as excellent! If that’s where you are right now, give yourself a nice little pat on the back.

The higher the score, the lower your credit risk. By having a good credit score, you’ll be able to secure a better deal for yourself when you apply for your next personal loan, credit card or any other borrowings.

Bad credit is determined by how you have managed your personal credit over the years. For instance, if you have missed many repayments over time or currently have a thin financial record, then it’s only normal that your credit score is less than ideal.

The following can harm your credit score:

  • Loan defaults
  • Missed or late payments and repayments
  • Bankruptcy
  • Exceeding your credit limit
  • Mortgage arrears
  • and more

Here’s one way how a bad credit score might impact you. Say you’re looking to apply for a personal loan of RM50,000 to finance an emergency medical situation. Having looked at your credit score, your credit provider decides to grant you only 75% of the financing you sought for, which is RM37,500, leaving you with a deficit which you’ll need to find elsewhere.

| See also: How to Read Your CCRIS and CTOS Scores |

Oh no, what now?

Stop. No need to panic. You’re not necessarily on some bad credit watchlist. There are ways and means you can ‘repair’ your credit rating, and in the meantime, there are also some alternatives to pursue in case you still can’t get that credit card (or you need the facilities it provides in a hurry).

Firstly, understand that CCRIS and CTOS reports are reports. They are not blacklists.

Everyone who has ever applied for a credit card (or owns a credit card), not to mention other types of loans, has a CCRIS report.

Same goes for CTOS – if you have ever requested for your own CTOS report, they will happily generate one for you, even if it’s completely clean. In that sense, both are like report cards in school – everyone gets one, and the report card isn’t good or bad, it’s the scores that tell the story of whether a person has a bad credit history or not.

CCRIS stands for Central Credit Reference Information System, and it is provided by Bank Negara Malaysia. You can ask for your own CCRIS report once every three months (just go to Bank Negara’s offices nationwide; they even have kiosks).

It reports quite a fair amount of information, but of importance is whether or not you are in arrears with regards to your repayments, how much you’re using of your total available credit (your gearing), how many applications for credit you have currently (all types of credit, not just credit cards, from all financial institutions), and more importantly, whether any of these accounts have been written off as non-performing. It is this last bit that lets banks estimate whether you’re a bad credit risk.

Meanwhile, CTOS is shorthand for the report generated by CTOS Data Systems Sdn. Bhd., a licensed credit reporting agency that searches through publicly-available information such as outstanding legal cases and notices of bankruptcy, in order to provide financial institutions a more detailed picture of your credit worthiness. There are other credit reporting agencies that do the same sort of thing; CTOS is merely one of the more well-known ones.

Again, neither CCRIS nor CTOS makes any analysis or recommendations concerning the strictly factual details in the report. As a result, not every bank, lender or financial institution will come to the same conclusions from the reports. What may seem like a bad credit risk to one bank may be quite acceptable to another. So it’s always worthwhile to try other credit card issuers out after you have taken some steps to repair your credit.

What can I do to improve my bad credit?

Start by paying off your debts. As you clear each debt, the banks will mark the account as ‘closed’; by the 15th of the following month, this information will be updated. This is the fastest way to ‘fix’ your CCRIS report and make it more likely for your credit card application to go through.

If there are any monthly payments in arrears, you’ll have to pay those off as well, but the CCRIS report captures 12 months’ worth of payment history, so that’s how long it will take to clear the arrears from the report.

Fixing your CTOS report is not as easy, although the steps are pretty much the same; namely, clear the underlying issue, whether it is bankruptcy proceedings or a legal case, getting the appropriate documentation and then report that to CTOS.

Can I still get a credit card if I have bad credit?

Yes you can. However this depends on your individual financial circumstances. There is most likely a credit card for almost every situation from great credit to none. For your benefit, you’ll need to be wiser in ensuring that you apply for the right credit card that suits you best.

Three tips for responsible credit card use – once you have successfully applied for one!

Keep in mind that your credit card offers a line of credit – and you should very well learn how to preserve its usefulness if you have bad credit. Use your credit card wisely and follow the following three commandments:

1. Say NO to month-to-month balance

Keep your plastic fantastic away from long-term loans. An 18% credit card interest rate can easily snowball and you’ll end up paying far much more than you owe!

2. It’s OK to swipe your card a little

Yes it is – especially if you’re aiming to build credit. Put a nominal charge on your credit card every month to ensure that the account is active. Your credit report will reflect that you are a genuine consumer especially if you’re always paying it off in full and punctually. Without any activity, there won’t be enough data collected to calculate a score

3. Check your statements

Never mind credit card fraud, mistakes are real and will have a negative impact on you if left unchecked. Make it a habit to scrutinise your credit card statement when the billing cycle comes around and in between via your provider’s online portal.

In the meantime, aside from getting another line of credit, what options do you have, if you really need access to a Visa or MasterCard account? The simplest one is to get a debit card or a prepaid credit card. As those do not involve the bank lending you any money, you are practically guaranteed acceptance.

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