Key Takeaways
- Credit scores in Malaysia range from 300 to 850, and good credit scores (typically 697 to 850) are crucial for securing larger personal loan Malaysia.
- Good credit scores lead to more favourable loan terms as they signal financial responsibility and lower risk to banks.
- Crucial practices to improve credit scores include paying bills on time, settling past-due accounts, and limiting credit card applications.
Do you need a larger personal loan in Malaysia? The pursuit of financial flexibility often prompts individuals to seek larger loans.
For many, this quest arises from having multiple credit cards and personal loans, as they aim to consolidate their debts and thus require a larger loan amount.
In this article, we’ll unveil the essential strategies that revolve around credit scores—your gateway to securing a larger personal loan in Malaysia. Continue reading to learn more!
What is A Credit Score in Malaysia?
A credit score is a numerical representation of a person’s creditworthiness. In Malaysia, credit scores typically range from 300 to 850.
Borrowers with higher credit scores generally have better chances of getting loan approvals because they are considered less risky by banks.
A pivotal element in shaping one’s credit score is their payment history. The consistent practice of making timely and complete payments significantly improves an individual’s credit score, establishing a favourable credit profile.
What is Considered a Good Credit Score?
A good credit score in Malaysia often falls within the range of 697 to 850 on the CTOS scale.
However, it’s important to note that this is not a strict rule, and there are various scoring models used by different credit agencies.
For many banks and financial institutions, a good credit score ranges between 650 to 750.
Scores within this range are generally seen as a positive indication of creditworthiness, while scores from 751 to 850 are considered exceptionally good.
How is a Credit Score Calculated in Malaysia?
Credit scores are calculated based on several factors, each with its own weight in the calculation:
- Payment Behaviour (45% of the score)
- Amount Owed (20% of the score)
- Credit History (7% of the score)
- Credit Mix (14% of the score)
- New Loans (14% of the score)
Read More: What You Should Know About Personal Financing in Malaysia
Why Do You Need a Good Credit Score to Get a Larger Personal Loan
A good credit score mirrors your financial responsibility and discipline. It not only showcases a history of effectively managing our finances but also serves as a signal to banks that you are a low-risk borrower.
When seeking a larger personal loan in Malaysia, having a good credit score enhances your chances of loan approval and may result in better favourable terms.
Those with good credit scores are perceived as less likely to default on their loans or make late payments.
In summary, a good credit score is an essential asset when you need to access substantial financial resources for various purposes, such as:
- Home improvements
- Investments
- Business expansions
- Medical expenses
- Emergency funds
How to Get a Good Credit Score in Malaysia
1. Pay Your Bills
Paying your bills on time helps maintain and improve your credit scores. Be sure to avoid missing more than 29 days of loan or credit card payments.
Moreover, to prevent missed payments, set up automatic payments for at least the minimum amount due.
2. Settle Past-due Accounts
If you have any past-due accounts, you should bring them up to date as soon as possible.
Late payments can have lasting effects on your credit report for up to seven years, but bringing accounts current can gradually boost your credit rating.
3. Limit Credit Card Application
To maintain a good credit score, limit the number of times you apply for credit cards. Remember, banks calculate a commitment of 50-100 for each card, regardless of whether it’s used or not.
Therefore, having multiple cards can significantly increase your overall commitment, affecting your financial standing. Instead of multiple applications, carefully pick a credit card that matches your spending patterns and financial objectives to build a positive credit history over time.
Read More: Why was Your Personal Loan Rejected in Malaysia?
Bluebricks’ Loan and Consultancy Services
Your credit score significantly influences your eligibility and the terms you receive for substantial loans. Hence, understanding the role of credit scores is paramount if you’re actively seeking a larger personal loan.
At Bluebricks, a reliable bank loan and debt consolidation agency in Malaysia, our financial experts are here to help you make the most of your borrowing potential by leveraging your credit score effectively.
We provide comprehensive loan services, including:
- Personal loan services
- SME loan services
- Mortgage loan services (for buying a new home, refinancing and cashback purposes)
- Collateral loan services
Furthermore, we provide tailored advisory services designed to address your individual financial circumstances, such as:
- The specific loan amount you require.
- The urgency with which the loan amount is needed.
- Whether you or your parents own a property that has been held for over ten years.
- Your income level.
- Your CTOS score (such as your credit score and credit history).
