For those familiar with this five letter abbreviation, it might as well spell N-A-S-T-Y. For those unfamiliar, well it’s high time you get acquainted because it might explain why your application for a loan is being thrown into a trash can.
The truth is, many people only have a rough idea of what CCRIS is and most do not know how it really works. This article, we hope, will help clear the air and maybe even give you some tips on how to make it work in your favour when applying for a loan.
What on earth is CCRIS?
CCRIS stands for Central Credit Reference Information System, which is a system created by Bank Negara Malaysia (BNM) to synthesise credit information about borrowers or potential borrowers into standardised credit reports.
The information is then made available to financial institutions (banks), company directors or individuals seeking this information for financial purposes upon request. Individual banks’ systems are typically tightly integrated to the CCRIS system and banks can automatically extract an individual’s credit report during the credit approval process.
Every participating financial institution (this includes licensed commercial banks, Islamic banks, investment banks, development banks, insurance companies and rehabilitation institutions) is currently required to submit their customers’ credit conduct to this centralised system.
What CCRIS is not
This is important, because many have made poor investment decisions based on a misconception of CCRIS and what it represents. It is simply a report on the credit history of individuals and not a black list. Even if your credit history is red-flagged in CCRIS, it does not mean you cease to exist as a financially viable individual. You can undo a bad report by having a recent history of good credit habits.
What categories of information does a CCRIS Report contain?
There are three major categories of information:
1.Outstanding loans – housing loans, hire purchase, credit cards, personal loans, overdraft and so on. This information consists of outstanding amounts, limits, payment behaviour, and legal status (where applicable)
2. Special attention accounts – this refers to accounts that have been deemed a Non-performing Loan (NPL), or under special debt management schedules such as those negotiated by AKPK (Counselling and Debt Management Agency).
3. Loan or credit facility applications made in the past one year – information on how many were approved or rejected.
How does a CCRIS report look like?
If you take a look at Table 1, the portions circled A, B and C are the categories of information we have already discussed, while D is the total outstanding amount and E is the total limit, or the original loan amount. F shows the repayment behaviour of the individual.
The numbers indicate the number of missed payments (‘1’ means there was 1 missed payment in the month of July 2012).
How long are the records kept?
CCRIS shows repayment records of the last 12 months only, after which the oldest data is expunged. Banks generally focus on information about accounts that are under legal status or special attention accounts. Utilisation of credit limits, for example, high utilisation of credit card or overdraft limits are also key indicator of poor finances.
How will CCRIS information impact you?
Apart from faulty loans and poor payment schedules, banks will also look at High Debt Servicing Ratio (DSR). This is done via comparing your income documents against the total outstanding credit.
Multiple active loan or credit applications can also impact your credit worthiness, as the more applications you make for loans, the more “desperate” you seem to banks.
Tips to improve your CCRIS record
If you have high credit utilisation, pay down some of your credit lines before submitting a loan application. Your CCRIS information is updated on the 15th of every month, meaning information for Jan 2013 will only be updated on Feb 15, 2013. So if you have paid down your credit lines anytime from Jan 1-31, time your loan application submissions on Feb 16.
A consistent string of 1’s in your repayment behaviour could indicate payment due dates that are earlier than your pay day. Try to get your bank to delay the billing cycle.
If you have known late payment records, wait 12 months from your last known late payment record before submitting a loan application.
Limit your amount of loan and credit applications. Shop around first, then selectively apply for the best products.
Contrary to popular practice, too many loan/credit applications actually hurt your credit score. One credit card with a large credit limit is better than two.
By contrast, being too “clean” can also hurt your credit score. From the Bank’s perspective, having no loans, no credit cards or overdraft facilities means there is no evidence of your credit behaviour, which also makes you risky.
In most cases, banks would not offer the full margin of finance where a person’s credit profile is blank. To be safe, have at least one active credit facility and pay on time.
This article was developed by loanstreet.com.my, however, certain portions may have been edited for brevity and/or to suit our readership. For more information on loan options and financing tips, please visit the website, https://loanstreet.com.my/
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