REFIX YOUR CREDIT HEALTH

Knowing your credit score goes a long way in improving your credit worthiness.

SO you’ve finally found your dream home. It is now time to apply for that housing loan. First, you need to get your documents in order for the bank to assess your financial standing. These usually include your latest payslips, personal bank statements and EPF statement.

You should also check your MyCTOS Score report before you apply to make sure everything is in order, says CTOS Holdings group chief executive officer Dennis Martin.

MyCTOS Score report provides a detailed evaluation of a consumer’s credit worthiness with a credit score system called CTOS Score.

Calculated based on five factors – payment history, amount owed, length of credit history, credit mix and new credit – the CTOS Score summarises your credit information and presents it in an easy to understand three-digit number.

“A CTOS Score gives you a snapshot of your credit worthiness. It tells at a quick glance what your credit health looks like, so that even if they don’t know you, the lenders will know if you are the type of customer they want,” says Martin.

The CTOS Score system is done in collaboration with FICO, the leading global analytics software company specialising in measuring consumer credit risk.

The scores range from 300 to 850 – the higher the score, the lower the credit risk.

While a low score does not necessarily mean it is “bad”, it indicates to banks and credit providers that the person is a highrisk borrower and they may tailor an offer which is a better reflection of that risk.

A high credit score indicates a person with good credit worthiness – someone who pays their bills promptly, maintains a low balance on credit cards and other revolving credit and obtains new credit only when needed. He or she is a low-risk borrower – a prime customer for lenders.

The general guideline is that a high or “good” CTOS Score generally ranges between 697 to 850, and scoring that increases a person’s chances of getting approved for loans and new credit.

A good CTOS score can also speed up the loan approval process, adds Martin.

Crucially, you may be able to use a good credit score to negotiate with lenders for a better deal.

“With a good credit score, you can say ‘Look, this means I’m a good customer. I’m a a good paymaster and a responsible borrower, so what can you do for me?’

“The banks will not only be more inclined to approve your application, they could also lend you a bigger amount or give you better rates,” Martin notes.

However, you should not only check your credit health when you are applying for a loan, he advises.

“You should check it frequently and learn to understand your credit information. Knowing your CTOS Score can also enable you to make informed decisions about your finances. You will be able to identify areas for improvements and take action to fix those areas,”says Martin, recommending at least a check every quarter of the year.

Checking your CTOS Score regularly can alert you of any red flags in your credit record that may impact your future credit applications, he adds.

“Various things can impact your credit score and it’s important to just keep an eye out on your finances.

“For one, if you have a listed late payment on existing facilities in error, or if you have forgotten to make a payment, checking your score can alert you to that, and give you the opportunity to fix it early, before you apply for the next loan, credit card or any other borrowings.”

It costs RM25 (plus GST) to get your MyCTOS Score report, but as Martin sees it, “RM25 is not a lot to pay to understand your credit risk – whether you are in a great position to get a loan or whether you have some financial issues that need to be resolved.

“The advantage of knowing where you stand when it comes to credit health is that you can then take measures to improve your score, especially if it falls in the lower range.”

Having a poor credit history or a low credit score can seriously impact people financially. One thing that can happen is you could be denied a line of credit.

“Even if you are not denied credit, it could be more expensive for you to get credit. You may have to pay more in fees or a higher interest rate, which increases your monthly payments,” says Martin, noting that when your credit records are clear and free from any doubts, you get the best possible chance of getting an approval from the bank in your future credit applications.

CTOS are also looking to reach out to those with no credit history, particularly fresh graduates and rural folks, with its new product The Thin File Scoring to help them get access to finance, he shares.

“About 25% of people who apply for loans are first time borrowers and have no credit history, so banks will typically decline them. The Thin File Scoring systems will help organisations read the credit behaviour of a potential customer, even if they don’t have any credit history.”

Regular score checks can also be a good fraud prevention tool, Martin highlights.

“With regular checks, any unexpected changes in your credit score can be investigated to see if any unauthorised credit facilities have been applied for or taken out in your name.”

This will be assuring to those who are worried about the safety of their personal data.

As a registered agency under the Credit Rating Agencies Act 2010, CTOS is legally empowered to collect and process information pertinent to credit evaluation, but access to this information is strictly limited and controlled by the Act, says Martin.

With the rising fear of hacking and identity theft, CTOS has beefed up its cyber security to safeguard the users’ data, he stresses.

“We are using proven technologies and sophisticated surveillance procedures to protect the security and privacy of all types of data we collect.

“We have also invested in a strong internal governance process and continued investment in ongoing security enhancements.”

Ultimately, says Martin, CTOS is focusing on raising people’s awareness on credit management and improving their understanding of how it affects their credit health.

“It’s about getting people to take responsibility for their finances.

“It’s about asking yourself, ‘Can I afford this? What will it mean if I take on this financial commitment?’” he says.

For this aim, CTOS is always accessible with its Personal Enquiries customer service helpline and seven customer service centres nationwide, where consumers can get advice or help with understanding their credit information including their CTOS score.

While Malaysia is catching up on the importance of personal financial health, we still have some way to go, he notes.

“But we are confident that as long as financial education is kept a priority, as we have been doing, we are in a promising situation.

“What we aim to do is to empower people to look after their financial health and get the rewards for that.”

To check your credit score report, go to www. ctoscredit.com. my or via the CTOS mobile app which is available for Apple and Android.

Crucially, you may be able to use a good credit score to negotiate with lenders for a better deal Dennis Martin CTOS Holdings Group CEO