Malaysians seem to be quite laid-back with regard to good credit management. A maiden consumer survey conducted recently by one of Malaysia’s leading credit reporting agencies (or credit bureaus), RAM Credit Information Sdn Bhd (RAMCI), revealed 64 percent of consumers have never viewed their credit report while another 8% were unsure if they have viewed it. Only 28 percent of respondents had seen their credit reports.
Of that number, only 40% viewed it proactively to ensure it is accurate and updated. The rest who read their reports did it in conjunction with a loan or job application, suspected fraud or when making a large purchase decision. At times like this, discovering an inaccuracy in their credit report would be a blow as it could deny them a loan or delay a purchase while the inaccuracy is investigated.
Chief Executive Officer of RAMCI, Dawn Lai said, “This is why we strongly encourage consumers to be proactive and know the critical importance of viewing their credit report at least once a year. Good credit management may also mean they are prepared for your next big investment decision. As the credit market grows, healthy credit management among consumers is key to keeping the industry robust. One of the reasons behind RAMCI’s maiden survey was to gauge how much consumers know so that we can further drive awareness on good credit practices.”
Although nearly three quarters of respondents knew what a credit report is, 56 percent did not know the function of a credit score and the impact it could have on their credit applications. A credit score, generated by a credit reporting agency or lender is a numerical representation of their credit profile. This credit score may be used by financial institutions to evaluate a person’s credit worthiness for a mortgage or loan and even determine the interest rate.
Various factors may lower a person’s credit score such as by making late or no credit card payments. Up to 64 percent of respondents were aware of this but only about a quarter knew that using up their available credit or frequently applying for new cards will also lower the credit score.
The survey, conducted mainly in Kuala Lumpur, revealed a lack of knowledge about credit reports. In Malaysia, a Credit Reporting Agency (CRA) is governed under the Credit Reporting Agencies Act, 2010 (Act) and licensed to collect credit information from public or private sources domain. A large portion of the survey respondents (40 percent) were not aware or were confused over the role of a CRA. Majority indicated an understanding that their borrowing history is recorded in a credit report, but 27 percent are still not sure. It probably surprised some to find out that a credit report also reflects bill payment habits, credit facilities applied for, litigation cases, and even lets you know when someone has requested to view your credit report.
This sketchy understanding of credit reports was also reflected when the majority of respondents believed they could obtain their credit reports from financial institutions, mortgage providers and even the government. In essence, consumers were not sure where to go to view their credit reports. “This is despite the fact that credit reporting agencies as well as the Registrar of Credit Reporting Agencies (Registrar) have been actively educating the public about credit reporting since the enforcement of the Act in 2014,” said Lai.
With the regulation of the industry by the Registrar, the established process to dispute and seek correction of information is evident by the 61 percent who reported being satisfied with the resolution taken by the CRAs.
Lai also observed that although a majority of those surveyed knew about credit reports, so few viewing their report showed a cursory awareness since it was not followed through with positive action. “Consumers should take charge of their credit health by checking their credit report especially in this challenging economic environment. If all consumers were to practice good credit management, Malaysia’s credit industry will grow positively and this can translate to better credit terms in the market. I would encourage the public to get in touch with us to obtain their personal credit report and check that all their information are accurate and updated. They can also find out which organisations have been requesting for their credit report. At RAMCI , we offer a comprehensive range of credit reports and tools for consumers to manage their credit profiles,” urged Lai.
With the results of this survey, Lai expressed that RAMCI aims to step up efforts to raise consumer awareness on the importance of credit management via credit reporting tools. “In fact, we have already been conducting roadshows and other consumer engagement initiatives and will do more,” she concluded.
To learn more about credit reporting, check out RAMCI’s Consumer Credit Reporting Education Programmes as well as other educational programmes by the Registrar of Credit Reporting Agencies.