How Financial Institutions Assess Your Credit Rating For Home Loan Applications

Financial institutions in Malaysia generally assess the credit rating of potential borrowers through the Central Credit Reference Information System (CCRIS) and Credit Tip Off Service (CTOS) or similar type of bankruptcy search.


CCRIS

A majority of financial institutions report to the Credit Bureau at Bank Negara Malaysia (BNM) monthly on all their loans. CCRIS is a computerised database system that stores information reported to the Credit Bureau. CCRIS currently contains credit information on about 5 million borrowers in Malaysia. CCRIS processes the credit data received from the financial institutions and summarises the information into credit reports, which can be made available to the financial institutions upon request.

Your CCRIS report shows your total principal, interest and charges outstanding on each of your loans including your housing loans, personal loans, credit cards, car hire purchase and overdrafts. It also shows the number of months your payments are in arrears on a monthly basis for one year. A CCRIS report also shows other loans you have applied for as well as brief information on summonses or bankruptcy petitions if any.

Financial institutions assess your credit rating by analysing each debt item, looking at your loan balances and trends in your repayments track records. In general financial institutions will either reject or query debt repayments in arrears of more than 2 months. Some financial institutions are stricter than others. Financial institutions will also use existing debt and debt application balances in the CCRIS report to estimate how much total debt commitments you have or are likely to have and the likely total monthly debt servicing amount. This information is used to calculate your debt service ratio. In general, financial institutions will reject or query a total debt service ratio of 50% of your monthly income.

You can obtain your own credit report by visiting BNMLINK at:

Ground Floor, D Block, Jalan Dato' Onn, Kuala Lumpur.
Tel: 1-300-88-5465 (1-300-88-LINK) (Overseas: 603-2174-1717)
Fax: 603-2174-1515 E-mail: bnmtelelink@ bnm.gov.my

For more information on CCRIS go to http://creditbureau.bnm.gov.my/.


CTOS or similar bankruptcy searches

CTOS Sdn. Bhd. and other similar organisations, collate public information usually from national newspapers on bankruptcy and summons information of individuals and companies into an electronic database.

Bankruptcy information include information of individuals and companies petitioned, declared, released or deceased bankrupt. Bankruptcy reports usually provide information such as the Court filing number, the location, the date of the Notice or order, the name of the individual, the identification card number and, in the case of petitions, the date of the court hearing.

Summons information usually include details of individuals and companies where substituted service of a summons has been issued, the Court filing number, the location of the filing, the date of the Notice or order, the name of the individual or company , the amount of the summons (if available), the identification number of the individual or company (if available) and the date of the court hearing.

You can currently obtain your CTOS report free from:

CTOS Sdn Bhd (209649-U)
Unit A-8-4, 8th Floor, Megan Avenue 1,
No 189, Jalan Tun Razak, 50400 Kuala Lumpur,
Malaysia
Tel: 603-2770 8833 Fax: 603-2770 8834
Website: http://www.ctos.com.my/

You can also enquire with the Jabatan Insolvensi Malaysia on your bankruptcy status. The department recently launched e-insolvency. The purpose of e-Insolvency is to facilitate individuals in checking their bankruptcy status and company's liquidation status via the Internet through the e-Insolvency portals. An individual can perform a search through appointed agents such as www.myeg.com.my, http://www.e-services.com.my/ or http://www.rilek.com.my/ .

For more information see http://www.bheuu.gov.my/jim/index.shtml .

Customer enquiry Information from your CCRIS and CTOS statements are often analysed at the start of your loan application. Your loan officer will usually enquire with you to clarify on any negative results in your loan accounts reflected in the reports. It may be a good idea to consolidate your debt or at least have a plan for debt consolidation prior to your application for a home loan. The loan officer would likely want to see that you are making an effort to ensuring that you can pay your debts as and when they fall due and maintaining a good credit rating in the long run.