Think your credit score only matters when applying for a loan? Think again. From renting a home to getting the best credit card perks, your credit score quietly influences major financial decisions. Yet, many Malaysians only realise its importance when faced with financial roadblocks. Understanding and managing your credit score can open doors to better financial opportunities and long-term stability.

What Is A Credit Score?

A credit score is a three-digit number that reflects your creditworthiness, typically ranging from 300 to 850. It is calculated based on key factors such as your payment history, outstanding debt, length of credit history, types of credit used, and recent credit activity. In Malaysia, credit scores are provided by Credit Reporting Agencies (CRAs) such as Experian.

How Does Your Credit Score Affect Financial Opportunities?

Your credit score impacts more than just loan approvals, it plays a role in shaping your overall financial well-being:

• Loan Approvals & Interest Rates: A higher credit score improves your chances of getting approved for loans and securing lower interest rates. On the other hand, a poor score can lead to higher costs or outright rejection.
• Credit Card Benefits: Good credit can unlock premium credit cards with better rewards, cashback, and lower fees, while a low score limits your options.
• Rental Agreements: Some landlords check credit scores before approving tenants, meaning a low score could make it harder to secure a rental home.
• Job Prospects: In certain industries, especially finance-related roles, employers may review credit history as part of the hiring process.

The State Of Credit Health In Malaysia

Rising living costs and financial literacy gaps continue to impact Malaysians’ credit health. While household debt remains stable, many struggle with repayments, affecting their credit scores and future financial opportunities.

Young Malaysians, in particular, face significant financial challenges. According to the Credit Counselling and Debt Management Agency (AKPK), 53,000 Malaysians under 30 collectively owe nearly RM1.9 billion in debt, reflecting widespread financial strain. At the same time, the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2024 found that 53% of Malaysians either do not know what a credit score is or do not fully understand its significance. This lack of awareness makes it harder to access financial products such as loans and credit cards, which rely on credit scores for approval.

How To Improve And Maintain A Good Credit Score

Maintaining a healthy credit score involves several proactive steps:

1. Pay Your Bills on Time: Consistently meeting payment deadlines is crucial, as payment history significantly impacts your credit score.
2. Reduce Outstanding Debt: Aim to lower your debt levels, focusing on high-interest debts first, to improve your credit utilisation ratio.
3. Keep Credit Card Balances Low: Maintaining low balances relative to your credit limits positively affects your credit score. 
4. Avoid Multiple Credit Applications: Frequent credit applications can signal financial instability. Apply for new credit only when necessary.
5. Diversify Your Credit Mix: Having a variety of credit types, such as mortgages, personal loans, and credit cards, can favorably impact your score.

How Experian’s Personal Credit Report Plus (PCRP) Can Help

Experian PCRP provides individuals with a clear snapshot of their creditworthiness, helping them gauge where they stand financially. This three-digit score, calculated using data from CCRIS, business records, and other sources, predicts the likelihood of default within the next 12 months. A higher credit score improves access to loans, credit cards, and better financial opportunities, while a lower score highlights areas for improvement.

For a complete view of your financial profile, Experian’s Personal Credit Report Plus (PCRP) provides a detailed breakdown of your credit standing, including:

• Personal Information – Ensures accuracy of your personal details.
• Banking Information (CCRIS) – Provides insights into your credit facilities and repayment history.
• Directorship and Business Interests – Lists any business affiliations that might affect your creditworthiness.
• Legal and Bankruptcy Information – Highlights any legal proceedings or bankruptcy records.
• Trade Reference (Non-Banking Information) – Includes details of financial commitments beyond traditional banking, such as telecom, utilities, and other credit-related transactions that may impact your creditworthiness.
• Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) – Reflects your PTPTN loan status, ensuring transparency in student loan obligations and their impact on your credit profile.

With Experian’s free PCRP, you can monitor your credit standing, detect errors, and take steps to improve your financial future.

Take Control Of Your Credit Health

Understanding and actively managing your credit score is essential for securing favorable financial opportunities. Experian offers a free Personal Credit Report Plus (PCRP) during the month of March, enabling you to assess your financial standing and take necessary actions to enhance your credit health. Redeem your complimentary PCRP here and embark on a path toward better financial well-being.

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• Experian
• Experian PCRP