Friday, May 31, 2013

Home Loan Application Rejected? Know CTOS and CCRIS (Part 2 of 2)

What is CCRIS?

CCRIS stands for Central Credit Reference Information System. It is a system created by Bank Negara Malaysia (BNM) which synthesizes credit information about a borrower or potential borrowers into standardized credit reports. The information is available to financial institutions (Banks) and the individuals (or company directors) themselves upon request.
Individual banks’ systems are typically already tightly integrated to the CCRIS system and automatically extract an individual’s/entity’s credit report during the credit approval process.
Every participating financial institution (Includes all licensed commercial banks, Islamic banks, investment banks, development banks, some of insurance companies, payment instrument issuers and rehabilitation institutions) is required to submit their customer's credit conduct to this centralised system.

What CCRIS is Not?

A black list.

What categories of information does a CCRIS Report contain?

There are 3 major categories of information:

1. Outstanding loans

  • Housing loans, hire purchase, credit cards, personal loans, overdraft etc.
  • Includes information on Outstanding Amount, Limits, Payment Behavior, and Legal Status if any.

2. Special Attention Accounts

  • Usually accounts deemed Non-Performing Loan (NPL), or under special debt management schedules such as those negotiated by AKPK

3. Loan or credit facility applications made in the past 1 year

  • How many were approved / rejected

How does a CCRIS report look like?

Example of CCRIS report
(Click on image to view full size)
A, B and C are the categories of information explained above D is the total outstanding amount E is the total limit, or the original loan amount F is the repayment behaviour. The number indicates the number of missed payments. (In the example CCRIS report, the '1' means there was 1 missed payment in the month of July 2012)

How long are the records kept?

CCRIS shows repayment records of the last 12 months only, after which the oldest data is expunged.

What do banks typically look out for that give a bad impression?

  1. Accounts under legal status (legal action being taken) or special attention accounts.
  2. Missed or late repayments.
  3. Utilization of credit limits e.g. A high utilization of Credit Card or Overdraft limits is an indicator of poor finances.
  4. High Debt Servicing Ratio (DSR). This is done via comparing your income documents against the total outstanding credit.
  5. Multiple active loan or credit applications. The more you applications you made, the more “desperate” you seem to banks.

Any tips to improve my CCRIS record to improve my chances of successfully applying for a loan?

  1. If you have high credit utilization, pay down some your credit lines before submitting a loan application.
  2. Your CCRIS information is updated on the 15th of every month e.g. information for Jan 2013 will only be updated on 15 Feb 2013. So if you have paid down your credit lines anytime from 1-31 Jan, time your loan application submissions on the 16th of Feb.
  3. A consistent string of 1’s in your repayment behaviour could indicate payment due dates that are earlier than your pay day. Try to get your bank to delay the billing cycle.
  4. If you have known late payment records, wait 12 months from your last known late payment record before submitting a loan application
  5. Limit your amount of loan and credit applications. If shopping around, shop around first, then selectively apply for the best products. Make use of Malaysia's most accurate loan comparison tool for this purpose. Contrary to popular practice, too many loan/credit applications actually hurt your chances of getting the best deals.