Applying for a line of credit or a loan may seem like a hit or miss. What’s frustrating is that, when you receive a rejection letter from the bank, you have no clue why you were declined.
While it’s disappointing to be left in the dark, there’s a way to find out how likely you’ll be approved for a credit card or loan beforehand – by checking your credit report.
When you look at your credit report, you’d be surprised to see details of your spending habits and what’s bad when it comes to your credit. You’ll also find out how to fix them so you can avoid being rejected from one bank to another – which can impact your credit health.
You can do so by checking your CCRIS or CTOS report to check if there are any red flags in the report that can affect your future credit or loan applications. The bear will help you finally get some of the uncertainties from credit application.
What is CTOS?
CTOS (CTOS Data Systems Sdn.Bhd.) is a private company under the scope of the Credit Reporting Agencies Act 2010.
CTOS collects information and provides a detailed credit reporting of your credit history for the past 24 months, legal proceedings, company ownership and directorship, to testimonies from companies that a company has business dealings with.
You can check your report to confirm you are financially healthy. Simultaneously, financial institutions check your report to determine your creditworthiness for a credit application or loan, as CTOS works both ways.
The information on your CTOS credit report is mostly used by banks to evaluate your loan application and decide if you are worthy to be given a loan.
Therefore, if you’re applying for any loan, it’s best to evaluate your credit profile first via CTOS to safeguard that your credit records are free of things that will give doubts to your creditworthiness so you can get a higher chance of getting approved by the bank.
How to get your CTOS report?
You can get your CTOS report online at MyCTOS report for free at the comfort of your home.
Register an account
Fill up the details required by providing your identity card no. (MyKad), your email address and the language you prefer – you can choose between English, Malay, or Chinese.
Once you’re done, you’ll then be required to fill up some of the details about you or your company.
Then, attach a front and back image of your MyKad to verify your details and fill in your mobile number.
A TAC verification code will be sent to your mobile number to complete the registration process. Once you’ve received your TAC code, put in the space to complete your registration.
There will be a confirmation email sent where you will have to verify your registration.You will receive another email where to inform you that your account has been verified, and registration is complete.
Activate your CTOS ID
Upon successful registration, you will have to wait three working hours for CTOS to verify your details and provide you with a valid user ID that you will need to access your CTOS report.
You will receive an email from CTOS with the details of your User ID via the email you provided.
The registration process is complete when you enter your user ID and your password and proceed to accept the terms and conditions.
Then choose a security question so your MyCTOS will not be logged in easily by someone else.
How to read your CTOS report?
Once you have full access to view your CTOS report, your first CTOS report will be sent to you for free. But don’t worry, you’ll still be able to check it anytime you when you go to CTOS website.
In the process, you will get a special email account to use for CTOS purposes. You can even access your report at the tip of your hands with the mobile app!
The first step in getting a higher chance of being approved is understanding what banks look at on your CTOS report.
The details of your report mainly include your identity verification, business exposure, directorships and business ownerships. It also has the features of legal actions, case statuses, bankruptcy information and your comments.
The most important part of your report that banks pay attention to is the third section, your financial history.
This section consists of three parts – your recent credit application and CCRIS details, a record of dishonoured cheques and your comment.
The CCRIS details are further broken down into three parts which will also be explained on the part of the CCRIS report.
Under the comment section, you can justify your financial behaviour. For instance, you have missed a payment because your balance statement was late.
Your CTOS records are kept for 24 months as an archive of your background and credit history. After that, your historical file will not appear in your CTOS report after two years.
Here is a breakdown of a basic CTOS report:
In the first section of your CTOS report, you’ll find basic identification information. Check that your details are accurate and write in to update changes in your address and others.
This section provides a quick look at your credit details from Bank Negara Malaysia and other agencies. Check if you have any outstanding credit or legal cases listed here. For instance, the value of zero (0) in the legal records section indicates that none have been found.
If you are a director, shareholder, partner or owner in a company, this section would reflect the five main linked businesses. Otherwise, the relevant columns will be marked with a dash, as above.
This section provides a quick outline of important credit information, such as payment records from CCRIS, or listings for ‘bounced’ cheques that were dishonoured due to insufficient funds.
The information in this section (E) is provided by sources like utility agencies or subscriptions services such as astro, regarding outstanding payments owed to them or payment defaults.
What is CCRIS?
CCRIS (Central Credit Reference Information System) is a system managed by Bank Negara Malaysia that collects credit information on borrowers from financial institutions. The CCRIS report is also used by financial institutions to help them establish a view of the credit histories of borrowers and potential borrowers.
The report shows detailed information on your outstanding credit, special attention accounts, and your applications for credit in the past 12 months that are pending or approved.
Your CCRIS records are kept for 12 months as a historical archive of your background and credit history.
The information on your CCRIS credit report is used by a financial institution to assess your credit card application as it contains factual and historical information on the loan amount, interest and outstanding balance on each credit line.
How to get your CCRIS report?
You can get your CCRIS credit report from Bank Negara Malaysia. If you are from the Klang Valley, you can get your credit report from the Customer Service Centre, Laman Informasi Nasihat dan Khidmat BNM (LINK) of BNM. You don’t have worry about paying a fee because it’s free.
If you are from outside of Klang Valley or BNM branches, you may apply for a credit report with the following:
- Credit Report Request Form (CRR);
- Loan Declaration Form;
- A clear photocopy of your MyKad (both sides); and
- Any combination of the two other documents (with your name and address from the following):
- Driving license;
- Water bill, electricity bill or telephone bill
How to read your CCRIS report?
CCRIS does not directly state if you have a good credit record or not. It just shows your credit history. Here is what your CCRIS report looks like:
Image source: Credit Bureau
This report contains credit information that is divided into three main sections:
1. Outstanding Credit
2. Special Attention Accounts
3. Application for Credit
Here’s how to understand the data printed in your report:
1. Outstanding Credit
This part shows your outstanding balance from existing credit facilities, including your repayment behaviour, arrears and legal status, if any. Your repayment behaviour shows how good you are as a paymaster.
If you have a number “0” in your repayments, this indicates that you pay on time, but if you are a month behind on your payments, you’ll have a number “1” on that particular loan. Having a legal status, on the other hand, tells that you have been sued by the existing creditor to pay up your dues.
2. Special Attention Account
All outstanding credit facilities which are under close management by financial institutions are contained under this column. Credit facilities that are considered as Non-Performing Loan (NPL) or under specially negotiated debt management schedules by Credit Counselling and Debt Management Agency (AKPK) are also included in this section.
3. Application for Credit
This is the section where banks look carefully to see if you can take on another loan based on your current status.
This article shows if you have applied for any credit facility in the last 12 months and if you have been approved or rejected. If your recent activity discloses that you have a current application that has been denied, your credit worth will seem questionable, and it could mean that you are unable to make repayments.
If it has been approved recently, then it will also look questionable why you need another line of credit if you can pay for it considering your existing commitments.
Banks generally look closely to the following to assess your creditworthiness:
- Missed or late repayments. If you have a lot of arrears, you will be considered having a bad rating by bank and financial institutions and will not provide you any further credit.
- Utilisation of credit limits (For instance, having a high utilisation of credit card as this indicates poor money management)
- Accounts under legal status or special attention accounts.
- High Debt Servicing Ratio (DSR). This is conducted when you compare your income documents against your total outstanding credit.
Is there a CCRIS or CTOS Blacklist?
As mentioned above, CCRIS merely compiles financial data and other information that relates to your creditworthiness.
CCRIS make no judgments on you; it doesn’ stamp a red mark or place you on a blacklist.
In fact, it is just one of the many tools a bank will use to assess credit applications.
Similarly, a basic CTOS report does not place you on a blacklist, but the MyCTOS Score report does assign a creditworthiness rating. It is a three-digit number ranging from 300 to 850, where the higher scores equal lower risks to lenders.
Your MyCTOS Score is based on five factors:
- payment history
- amounts owed
- credit history length
- credit mix
- new credit
Note that ‘payment history’ bears the heaviest weight on your CTOS score, accounting for 45%.
According to CTOS, applicants with scores ranging from 300 to 696 may appear less viable for credit to lenders. Conversely, those with scores ranging from 744 to 850 are likely to be viewed ‘very favourably’ to lenders.
Still, banks do not necessarily make their decisions on loan and credit applications based on credit scores alone, though it could be a major factor. In addition, they may also use credit reports from other organisations like RAMCI’s i-Score or the Credit Bureau’s MySCoRE.
There may be default probabilities (how likely or unlikely you are to default on a loan) attached to these scores as well. For instance, if MySCoRE gives you an AA credit grade, your credit score will be within the range of 594 to 900.
Based on their calculations, the probability of you defaulting on a loan is from 0% to 2.4%. This would make you a very good loan applicant, but it still does not guarantee approval.
In that same vein, if you received a MySCoRE credit grade of DD, the chances of your defaulting on a loan goes up to a range of 6.95% to 10.81%.
Again, since each bank evaluates loan applications by its own set of criteria, your DD grade does not confirm that you will be altogether rejected.
What about bank blacklists?
While CCRIS and CTOS will not blacklist you, a bank may out you on an internal blacklist when you default on loan instalments, credit card payments, and other financing.
However, even if you are on such a blacklist, you can still clear your name by paying the money you owe.
You may also need to allow for some time to pass (12 to 24 months), so that the arrears no longer appear in certain credit reports.
In the meantime, you can make good decisions and practice healthy money habits to improve your credit standing. Read the next section to find out how you can make your credit situation a lot healthier.
How to improve your credit score
There are many reasons why it’s so important to maintain good credit and improve your poor credit.
Not only does ‘good credit’ enhance your odds for loan approvals, it puts you in a good position for lower interests as well as better loan deals and financing options.
With that said, good credit does not happen overnight, but improving your credit standing is very possible with diligence and good habits like these:
1. Check your credit report
Before applying for any credit or financing, it’s highly recommended that you get your credit reports. As mentioned above, it’s incredibly easy to get your hands on these reports for free, so don’t put it off.
If there are arrears – clear them off and if there are entries that aren’t accurate, be sure to dispute them to keep your record clean. Also, don’t forget to monitor your credit at least once a year.
2. Pay off credit cards and loan instalments on time
These types of payments should be a top priority, because missing payments will have an adverse effect on your credit score.
Also, whenever possible, pay more than the minimum on credit card bills and aim to clear the outstanding payments within six months or less. This will help keep credit utilisation low and reduce your risk of mounting unmanageable debt.
3. Clear off outstanding utilities too
Racking up and then not paying your basic utility (Tenaga Nasional, Telekom, and others), subscription services (big fan of Netflix?), and internet bills can also put a damper on your credit. These outstanding payments could appear in your CTOS report and will be looked upon critically by lenders.
4. Avoid applying for too many loans and credit cards
It’s not uncommon to apply to at least two or three banks when seeking out a loan as you shop for rates. However, if you do it too frequently, you may appear ‘desperate’. This is especially unfavourable and could impact your credit standing if your applications are repeatedly rejected.
Thus, it’s a good idea to focus a period for loan applications and if yours are rejected, hold off from applying. Find out the possible reasons for being denied and fix them where possible before applying again (at a later date).
5. (Re-)Negotiate loan repayments
Be proactive if you are having trouble payingoff your loan instalments or credit card balances and call your bank to negotiate repayments. This way, rather than just defaulting or making late payments and suffering the consequences (that is, having it appear on your CCRIS report), you can ask for leniency and give yourself more time. It may not always work but it is certainly worth a try.
By now, you know that your CTOS and CCRIS reports help banks and financial institution decide if they should approve your loan or credit application. But remember, banks also look at other things like your debt-service ratio (DSR), among others.
Think of your credit reports like a report card, showing how trustworthy you are to banks. Regularly checking your credit report can help you keep track on your financial health. You’ll be able to pre-assess yourself if you’ll be approved for a loan or a line of credit if not, it’s time to take steps towards improving your finances.
So if you’re looking to apply for a personal loan, keep in mind that your credit score is super important! And you should be the person to take charge of it!
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