Based on Bank Negara Malaysia Annual Report 2014 (March 12, 2015), the ratio of the Malaysian Household Debt to Gross Domestic Product (GDP) has increased to an alarming rate of 87.9% in 2014 as compared to 86.7% in 2013. In other words, for every RM1,000 earned, RM879 is used to servicing oustanding loans and the balance of RM121 is the disposal income for the family’s needs. This is definitely not a healthy debt as servicing the loan at around 88% is above the capability of any family.
In financial terms, this means that the average Debt Servicing Ratio (DSR) for each family in Malaysia is about 88%. Due to this fact, having a record in CCRIS is quite common even for high earning individuals. If you think paying the car loan or housing loan late even for a day is alright, you have to rethink it again. Because your one day or 30 days late may result in a record in the CCRIS report. CTOS on the other hand, records more severe cases which includes bankruptcy status. Both CCRIS and CTOS reports are crucial reference points for financial institutions before they extend any loan to you.
Before we continue any further, you may want to know what are these report all about and how it can impact your future loan application.
What Is CCRIS Report?
Central Credit Reference Information System (CCRIS) Report is a report that shows the credit standings of an individual. It will have a listing of all the current outstanding loans with all the Malaysian financial institutions and the record of the number of months of late payments. CCRIS is managed by the Credit Bureau under Bank Negara Malaysia. Beware that now outstanding PTPTN loan will also be reflected in the CCRIS report. CCRIS report displays your payment schedules for 12 months record.
This CCRIS report can be easily accessible by using your Mykad at the kiosk in Bank Negara Malaysia (BNM). Other ways to obtain your CCRIS report, refer to the credit bureau website: http://creditbureau.bnm.gov.my/
What Is CTOS Report?
CTOS report is from CTOS Data Systems Sdn Bhd, which is a Credit Reporting Agency that keeps records and information on bankruptcy status, legal proceedings and even summons for individuals and business entities in Malaysia. The CTOS report has all the information of the legal proceedings and bankruptcy information which includes, court file number, filing location, date of notice/ court orders, under individual’s name or company’s name, the suit amount, identity card number or company’s registered number and the date mentioned in court proceedings. CTOS report is a detailed credit history of your 12 months records. Similar to CCRIS report, CTOS report is also a compulsory reference point for the financial institutions/ bank reviews before they extend any loan.
How Does CCRIS And CTOS Report Affect My Housing Loan Application?
As instruction from Bank Negara Malaysia, both reports are compulsory checks by the financial institutions and banks before they can render any loan to the borrower. Hence, a bad record (late payment records) in CCRIS and any records in CTOS – which is for the period of 12 months would reduce the eligibility of the loan and very high possibility that the loan to be rejected. As the debt ratio is about 88%, in order to reduce the non-performing loans, the banks are constantly tightening the loan approval. Hence, more substandard cases to be rejected.
How To Obtain My CCRIS And CTOS Reports?
The Late Payment In CCRIS Is Because My Salary Is Credited After The Loan Payment Date
Sometimes the salary is credited after the loan payment date, hence the late payments usually settled within the month. However, be it 1 day, 5 days, or even 30 days, the bank will still treat it as late payment. In addition, the banks will definitely charge you interest on the late payments computed by the number of days late. Furthermore, the late payment will also be reflected in the CCRIS report. Once it is in the CCRIS report, it will be reflected in your CCRIS credit standing report for 12 months as the report is automatically printed for minimum 12 months period. This may then impact your future borrowing eligibility.
Even when it is not your fault that resulted in late payments, your late records will still be recorded in CCRIS. Check out how my friend was charged RM10K from the local financial institutions without him knowing and without informing him until it accumulated to RM10K.
Our suggestion is always to pay the loan instalment payments at least one month in advance, so that no matter when your salary is credited, you would not have the late payment issues.
AIA has the flexibility to pay extra the instalment payments as advance without notice and without penalty. If there are extra payments received either on an adhoc basis or periodically, the payment would be directly netted off against the principal amount immediately, reducing the loan to eventually savings on the interest repayments. In the event there is no payment or late payment of the loan instalments, AIA would then take into consideration the advance payments made on the housing loan and not charge late interest payments on the loan. In addition, you have 7 days grace period to pay the loan installments without late payment penalty charges. This is only applicable with AIA mortgage loan. Call us at +6012-2128008 (Rose Chin) to know more details about our loan package.
What Does A Clean Report Means? Is It Good Or Bad?
Clean report means no late payment records in CCRIS for the past 12 months and no records in CTOS. Usually when you are prompt in your payments and no legal suit proceedings, your loan can be easily approved even within 3 days after the receipt of the application form. Usually the loan process would require about 7 working days for approval.
However, too clean report (No Records At All) is also not advisable as well. Meaning if you have not taken any loans before and you have not subscribed to any credit cards before, and suddenly, you want to get a housing loan from a bank; the financial institution may not be too comfortable with the loan approval. To the banks, you have no credit history in Malaysia and they are not able to access your loan repayments patterns. Hence, they might lower the margin of the loan. This is true and applicable more for Malaysian working in foreign countries and getting your first loan in Malaysia.
After going through the definition and the introduction of both the credit history reports, I believe you have a better understanding of your own financial status. Hence, you could arrange to clean up your records first by paying promptly every month without fail; before applying for any future loan so that the chances of your loan approval is higher. A lot of people think that it’s ok to leave the CCRIS report as it is and CTOS report as it is. This is only applicable when you do not require to obtain any loans in the near future. However, when things go bad, when economy is not doing very good, and business is slightly affected, then it’s a bit too late, as you may not have sufficient funds to even sustain the business, what more to repay the debts on time.