Understanding and improving your credit score is essential when you want to apply for a credit card in Malaysia. A good credit score indicates to lenders that you manage money responsibly. This increases your likelihood of being approved for a credit card, often with better terms and benefits.

Credit cards are valuable financial tools, but getting one depends on proving your creditworthiness. Your credit score is the key indicator for lenders to assess your risk. This guide will explain how your credit score is determined and provide practical steps to improve it, helping you succeed with your credit card applications.

How Your Credit Score Is Calculated

In Malaysia, your credit score is primarily calculated by credit reporting agencies (CRAs) like CTOS and Experian. They use information from the Central Credit Reference Information System (CCRIS), which is managed by Bank Negara Malaysia (BNM). While each CRA might use slightly different methods, the main factors influencing your score are consistent.

Here are the key elements that typically affect your credit score:

• Payment History: This is the most critical factor. It shows if you pay your bills, including loans, existing credit cards, and utility bills, on time. Late payments, defaults, or bankruptcies will severely harm your score.
• Amounts Owed / Credit Utilisation: This measures how much of your available credit you are currently using. Keeping your credit utilisation ratio low, ideally below 30% of your total credit limit across all credit cards and credit lines, shows responsible credit management.
• Length of Credit History: A longer history of open credit accounts in good standing is beneficial. It demonstrates a consistent ability to manage debt over time.
• Credit Mix: Having a mix of different types of credit, such as a credit card, a car loan, or a housing loan, can positively affect your score. This shows you can handle various financial obligations responsibly.
• New Credit / Hard Inquiries: Each time you apply for a new credit card or loan, lenders perform a ‘hard inquiry’ on your credit report. Too many hard inquiries in a short period can suggest higher risk and temporarily lower your score.

Where You Can Check Your Credit Score For Free

Checking your credit report and score is an essential first step to understanding your financial standing. In Malaysia, you can obtain your CCRIS report for free directly from Bank Negara Malaysia.

You can access your CCRIS report online for free through Bank Negara Malaysia’s eCCRIS Portal. If you are a new user, you can register via the official eCCRIS portal. Alternatively, you can obtain a physical copy of your CCRIS report at BNM branches or Agensi Kaunseling dan Pengurusan Kredit (AKPK) premises, often using self-service kiosks.

While CCRIS provides your raw credit data, private credit reporting agencies like CTOS and Experian provide more comprehensive credit reports and calculated credit scores. These reports often include data beyond CCRIS, such as non-banking trade references. Many of these agencies offer free basic reports or trial periods, and some financial institutions may provide free credit score checks as part of their services.

Regularly checking your credit report is crucial for detecting any errors or fraudulent activity that could negatively impact your score without your knowledge.

Effective Ways To Improve Your Credit Score Quickly

While a drastic improvement overnight is unlikely, consistent positive financial habits can significantly enhance your credit score. Here are some of the most effective strategies:

• Pay Your Bills On Time, Every Time: This is the most important action you can take. Your payment history accounts for the largest portion of your score. Set up direct debits or reminders for all your credit cards, loans, and even utility bills to ensure you never miss a due date. Even one late payment can harm your score.
• Settle Past-Due Accounts: If you have any overdue accounts, make it a priority to settle them as quickly as possible. Even though a late payment might remain on your report for some time, bringing accounts up to date demonstrates renewed financial responsibility.
• Maintain Low Credit Utilisation: Aim to keep your credit cards balances well below your credit limit, ideally below 30%. For example, if you have a credit card with a RM10,000 limit, try to keep your outstanding balance below RM3,000. Paying down credit card balances is one of the quickest ways to see a positive impact on your score.
• Limit New Credit Applications: Each new credit card or loan application leads to a ‘hard inquiry’ on your credit report. While one or two inquiries will not severely damage your score, multiple applications in a short period, such as within six months, can suggest higher risk and temporarily lower your score. Only apply for new credit when it is genuinely necessary.
• Keep Old Credit Accounts Open (If in Good Standing): The length of your credit history contributes to your score. If you have older credit cards or loan accounts that you have managed responsibly, keeping them open, even if rarely used, can help maintain a longer credit history. Closing old accounts might shorten your average credit age.

How To Build A Credit History From Scratch

Starting without a credit history can be challenging because lenders have no past behaviour to assess. However, there are several effective ways to begin building a positive credit history:

• Apply for a Basic Credit Card or Secured Credit Card: Some banks offer basic credit cards with lower income requirements. Secured credit cards, which require a cash deposit as collateral, are also available. These are excellent starting points to demonstrate responsible usage.
• Take a Small Loan (and Repay Diligently): A small personal loan or even a hire purchase agreement, for example, for a motorcycle or furniture, that you consistently repay on time can establish a positive payment history.
• Ensure All Your Payments Are Reported: While utility bills are often not reported to CRAs unless they are overdue, ensure any loans or financial products you do have, such as student loans from PTPTN, are being reported to CCRIS and CRAs. Crucially, make sure you pay them on time.

Consider Being a Supplementary Cardholder: If a trusted family member with an excellent credit history adds you as a supplementary credit card holder, their good habits could indirectly benefit your credit profile. However, the impact of this approach can vary.

Getting A Credit Card With A Low Income

Yes, it is possible to obtain a credit card even with a low income, although your options might be more limited. Banks typically have minimum income requirements for credit cards, but these requirements can vary between institutions.

Consider these approaches:

• Look for Entry-Level Credit Cards: Many banks offer basic or entry-level credit cards that have lower income thresholds, often starting from RM2,000 to RM2,500 per month. These cards might have fewer benefits but are an excellent starting point for building credit.
• Consider a Secured Credit Card: As mentioned earlier, a secured credit card requires you to place a cash deposit with the bank, which then becomes your credit limit. This significantly reduces the bank’s risk, making these cards more accessible for individuals with no credit history or lower income.
• Maintain a Good Existing Financial Relationship: If you have a long-standing savings or current account with a particular bank and a history of good financial behaviour, that bank might be more inclined to offer you a basic credit card.
• Demonstrate Financial Stability: Even with a lower income, showing consistent employment and responsible money management, such as regular savings, can positively influence a bank’s decision regarding your credit card application.

To explore and compare credit cards that fit your income level and financial goals, visit the RinggitPlus comprehensive credit card comparison tool.

• TAGS:
• CCRIS
• Credit Score
• Experian
• Financial Planning
• How-To