If you have bad credit issues, Malaysian banks may reject your loan application even if your income is high. However, don’t lose hope!
In this article, we explore methods to help you obtain a personal loan, even with bad credit. Here’s what you should know:
- Loan Amount: Determine the loan amount you need by adding up your current credit card debt, personal loans, external debts, and current financial needs.
- Interest: Interest rates can range from as low as 3% per year to 18% per year.
- Loan Tenure: You may be eligible for a repayment period of up to 10 years.
*Note: Loan interest and loan tenure are determined internally by the bank based on your personal circumstances:
- Where do you work?
- Are you single or married?
- What is your educational qualification?
- Where do you live? (Living in the city is typically more expensive than in the suburbs)
- Are you employed full-time or on contract?
- Is your basic salary over RM5,000?
- What industry is your company in? (During the pandemic, for example, companies related to tourism, such as the airline industry, were considered high-risk industries)
Solutions for Bad Credit Loans
Bluebricks’ method first settles your bad credit (without calculating interest, no collateral required, no guarantor needed) and then submits it to the bank.
After the Bank Personal Loan is approved, we repay the principal plus our service fee (we charge only one fee and no upfront payment).
Why Can This Method Help Bad Credit Loan Clients?
Your current credit history is unfavourable, so we must settle all negative records before submitting the application to the bank.
This allows the bank to see that your credit history has no negative records, credit cards have little to no outstanding balances, and you have a low DSR (high debt servicing ability).
This approach enables us to submit a loan application on your behalf. Otherwise, the chances of rejection would be very high.
Advantages and Disadvantages of Personal Loans for Bad Credit
Disadvantages:
- Need to pay a consultation fee
- Bank loan is not obtained immediately; it takes at least 30-90 days to get a personal loan
- Increases total liability
Advantages:
- Cash in hand
- Reduced monthly instalments, depending on how much cash in hand you need
- Increased monthly cash flow
- A temporary solution to financial problems, giving you breathing room
- No pressure from banks to chase payments
- All debts are consolidated into one or two loans, making monthly payments easier to manage
- Previous bad records disappear
- Improved credit report, enabling car and house purchases
- No fear of your employer discovering poor credit reports (especially relevant for large companies that periodically check employees’ credit reports)
Important Considerations for Bad Credit Loans
Our settlement does not calculate any interest for you:
- We do not collect any upfront payment, lawyer fees, document fees, account opening fees, etc., from you in advance.
- We currently only serve salaried employees with income above RM5,000, who have EPF deductions, have been working for more than 6 months, and are confirmed staff.
- Not for clients with legal cases/summons cases.
- We do not handle business owners, commission-based workers, or those with basic salaries of less than RM5,000.
Our Service Fee for Personal Loans for Bad Credit
The service fee for Bad Credit Personal Loans is between 15% – 30%. The following factors are considered in determining the fee:
- Issues in your CTOS report:
- What problems need to be settled?
- How much money is needed to settle?
- After settling Bad Credit, how many banks can we work with?
- After settling Bad Credit, how much of a loan can be borrowed?
- Your income situation:
- Is your income stable?
- How much is your income?
- What industry do you work in?
- Is your debt service ratio (DSR) over 50%?
- Does the lender consider your risk high or low?
- How much cash-in-hand do you need?
Why Do I Need to Pay You a Fee?
Because your loan application submitted directly to the bank will not be approved, and you need a bank loan. Bluebricks uses funders, bank connections, and our experience to approve your loan.
How Long Does It Take for a Bad Credit Loan to Be Approved?
The fastest can be 30 days, and the longest can be 90 days. This depends on how quickly your current bank can update your record.
It also depends on how much loan amount you need (the larger the loan amount, the longer it takes).
Process for Bad Credit Loans
- Collect credit reports & full income document
- Get bank proposal & calculation breakdown in 3-5 days
- Sign agreement and perform settlement
- CTOS update & loan submission
- Bank approval and client repay us the fund and service fee
- Monthly direct payment to bank
What is Bad Credit?
Bad credit can manifest in several ways:
1. Low & Poor Credit Score (300-650)
- Credit scores don’t suddenly drop; there are specific reasons for the score to decrease. Generally, late loan repayments, having SAA, entering AKPK, or repeatedly applying for bank loans will continuously deduct points.
2. Late Payment
- If you haven’t paid the amount specified by the bank after the due date, it is considered a late payment. Banks usually give a 14-day grace period. After that, it will be recorded in your credit record. The record is kept for 12 months. Late payment for more than one month (if you’re in arrears for more than 2 months, you basically can’t borrow any bank loans) significantly impacts your credit.
3. SAA (Special Attention Account)
- If your credit card outstanding balance and personal loan instalments are in arrears for at least 2 months, the bank will pay special attention to your account and update the national bank about your untimely repayment behaviour. This loan account will then enter SAA status.
4. AKPK (Agensi Kaunseling dan Pengurusan Kredit)
- A “K” remark will appear in the Credit report, indicating that you have entered the AKPK programme. This means that when you applied for this programme, you stated that your financial situation was troubled and needed this agency to help negotiate and lower your monthly bank payments.
5. Trade Reference
- This occurs when you signed a contract during consumption but failed to fulfil it, causing the other party to notify CTOS. This serves as a reference for new service providers or banks. Examples include:
- Koperasi Trade reference
- Money Lender Trade reference
- Telecommunication & Buy Goods Trade reference
Sample Documents
1. Low & Poor CTOS score: (300-650)
2. Late Payment
3. SAA (Special Attention Account)
4. AKPK Record
5. Trade reference
a. Koperasi Trade Reference Sample
b. Money Lender Trade Reference
c. Telecommunication & Buy Goods Trade reference
How Do You Check If You Have Bad Credit?
You can purchase a report from Touch n’ Go and send the CTOS report to us. Our specialists will help you check for free whether you have bad credit. Alternatively, you can check yourself based on the samples we provide.
Another way is to provide a copy of your IC to Bluebricks, and we will help you check the latest CTOS report for free. Our specialist will then assist you in determining whether you have bad credit.
Can I Still Borrow a Bank Loan if I Have Bad Credit?
You can still borrow a Bank Personal Loan if you meet these conditions:
- We currently only serve salaried employees with income of RM5,000 or more, who have EPF deductions, have been working for more than 6 months, and are confirmed staff
- Not for clients with legal cases/summons cases
What Options Do Customers with Bad Credit Have for Borrowing a Bank Loan?
1. Slow method (saves on Consultation fee)
- Low & Poor CTOS score (300-650): Maintain timely bank payments for 6-12 months, clear SAA, trade reference, wait until the score reaches 650 before applying for Personal Loan
- Late Payment: Maintain timely bank payments for 6-12 months, apply for Personal Loan after late payment records are delayed for 6 months or disappear
- SAA (Special Attention Account): Negotiate repayment terms with the bank, borrow Personal Loan after clearing
- Trade reference:
- Koperasi Trade: Negotiate repayment terms with Koperasi, borrow Personal Loan after clearing
- Money Lender: Negotiate repayment terms with Money Lender, borrow Personal Loan after clearing
- Telecommunication & Buy Goods Trade reference: Negotiate repayment terms with Telco company/shopping company, borrow Personal Loan after clearing
- AKPK: Need to leave AKPK, repay the bank yourself, can apply for new loans once old loans are cleared
2. Fast method: Find a loan agency to resolve bad credit record, then borrow a personal loan
3. Borrow from Money Lender: Money lenders are more relaxed about bad credit. Note that loan amounts are small and interest rates are high (An annual interest over 18% is considered loan sharking)
Bluebricks’ Advice for People with Bad Credit Seeking Personal Loans
1. Consider the purpose of your loan:
- Need money for a short time (Bluebricks takes at least 30 days due to bad credit factors)
- Reduce monthly burden
- Want to increase monthly cash flow
- Need to clear bad credit in a short time (need to apply for credit card, buy car, house, job requirement)
- Want to avoid mental pressure caused by banks calling to chase money
- If none of the above, you can slowly clear Bad Credit, or choose to enter AKPKe:
2. Is there an emergency? If not urgent, you can slowly clear, then borrow a personal loan
3. Review your budgeting, then identify where problems occur
4. Understand that loan agencies only temporarily solve your financial problems
How Much Personal Loan Can I Borrow with Bad Credit?
We calculate based on your credit report, character (income range), and DSR. We can help you check how much you can borrow. Provide us with the necessary documents, and you can know your potential loan amount in 3-5 days.
Sample Proposal
Frequently Asked Questions (FAQ)
1. How can I estimate my personal loan amount with bad credit without affecting my credit score?
Our checking process won’t affect your CREDIT score. We use a system to calculate your DSR and current loan interest, and we leverage our connections to review how much your profile can borrow.
Moreover, we don’t require you to sign any bank application form, so it is 100% guaranteed that it will not impact your credit score.
2. How do I calculate my personal loan monthly instalment?
Use this formula: Monthly instalment = [(Loan amount x interest per annum x loan tenure) + loan amount] / [loan tenure x 12 months]
Example: Loan amount = RM100,000, Interest per annum = 10%, Loan tenure = 10 years
Monthly instalment = (100,000 x 10% x 10 years) + 100,000 / [10 years x 12 months]
Monthly instalment = (10,000 x 10 years) + 100,000 / 120 months
Monthly instalment = [100,000 + 100,000] / 120 months
Monthly instalment = 200,000 / 120 months
Monthly instalment = RM1,666.67
3. What documents do I need to apply for a Bad Credit Loan?
– CTOS report: front and back IC copy
– 6 months’ latest payslips
– Latest bank statement for 6 months
– Latest EPF Details statements for 2 years
– 2 years income tax (EA), if you have
4. Why should I trust you?
You don’t need to trust us immediately. First, review our Bluebricks Proposal and breakdown calculation. Then, decide if you want to proceed.
You can also look at our successful examples as references.
Our risk is greater than yours because we pay for the settlement first. If the loan is not approved, we lose more than you. (This is why we don’t take on every case)
5. Can foreigners borrow Bad Credit Loans?
No, they can’t.
6. How can I identify and avoid Bad Credit Loan scams?
To protect yourself from predatory lenders and scams when seeking a bad credit loan, be alert for these red flags:
– Pressure to make an immediate decision
– Lack of a secure website (URL should start with “https”)
– Guaranteed approval without checking your credit history
– No physical address is listed for the company
– Unsolicited loan offers through various channels
– Requests for upfront fees before loan approval
– Difficulty finding clear contact information
Remember, legitimate lenders will always review your financial history, provide clear terms and give you time to consider their offer. They should also have proper licensing, secure websites, and transparent contact details.
Always conduct thorough research and trust your instincts when evaluating loan offers. If something seems too good to be true, it probably is.
7. How can I know if I’m borrowing from an ‘Ah Long’ (Loan Shark) or a Legal Money Lender?
The key is to know how to calculate personal loan instalments yourself. Using the formula provided earlier, you can determine your interest rate. If your interest is higher than 18% per year, the loan you’re considering is not from a legal money lender.
Use this formula: Monthly instalment = [(Loan amount x interest per annum x loan tenure) + loan amount] / [loan tenure x 12 months]
Example: Loan amount = RM100,000, Interest per annum = 10%, Loan tenure = 10 years
Monthly instalment = (100,000 x 10% x 10 years) + 100,000 / [10 years x 12 months]
Monthly instalment = (10,000 x 10 years) + 100,000 / 120 months
Monthly instalment = [100,000 + 100,000] / 120 months
Monthly instalment = 200,000 / 120 months
Monthly instalment = RM1,666.67
