Selasa, 15 Ogos 2017

CCRIS and How Banks Evaluate Your Credit Record


What is CCRIS

CCRIS is a centralized system under Bank Negara which compiles data on your outstanding loan amount and payment history for the past 12 months, at any given time. Any records older than 12 months are “purged”.

If you are late in payment (lets say 6 months outstanding in Feb 2017) but you have paid off the outstanding in March 2017, the records will still show February = 6 months, March = 0 months, April = 0 months. As CCRIS is a report for 12 month period, the 6 months in arrears records will only ‘disappear’ in February 2016 (12 months later). You just cannot erase or request to clear it before that, as it is a rolling report.

If it shows, for example, 2 2 2 2 – -, meaning your loan has been due for 2 payments for 4 months.

Everyone has their CCRIS report which can be retrieved by financial bodies and by the individual himself, but not by other people. In other words, your eligibility for loan has nothing to do with how well you know your banker (although that *might help?).

The Credit Bureau  is legally empowered to collect credit information about you from these financial institutions.

However, the Credit Bureau simply reports and does not “judge” your creditworthiness. Also in all fairness, information on rejected credit applications is not reflected  in credit reports so that one bank will not be biased by the prior decision of another bank. Your CCRIS information could in fact be treated differently and subjectively by each financial institution.

Currently, there is an arbitrary limit for the public to print their own report – it can only be done once every three months.

How to conduct your CCRIS check

According to the BNM’s website, there are only 5 locations in Peninsular Malaysia (Penang, Johor Bahru, Kuala Terengganu, Kuala Lumpur and Shah Alam) and two locations in East Malaysia (Kuching and Kota Kinabalu) for the public to print their CCRIS reports. If an individual is located in Melaka or Ipoh, they would need to go to BNM’s HQ to print their reports.

How to Read the Content of CCRIS report

OUTSTANDING CREDIT vs APPLICATION FOR CREDIT.
The report is divided into two main areas i.e. the Outstanding Credit, where it displays all your existing credit facilities, and the Application For Credit, which shows all the loan application you made in the past 12 months, whether it was Approved, Pending or Rejected by the bank.

STATUS
Indicates the status of the credit facility. Outstanding i.e. on-going facility. Other terms include Pending, Approved, Rejected, Settled, Write Off, Rescheduled, or Restructured.

CAPACITY
Indicates the capacity the borrowing you took from the bank i.e. as a own applicant, sole proprietor, partnership, joint application, acting as a guarantor.

LENDER TYPE
Indicates the exact financial institution you borrowed from.

NATIONALITY
Indicates whether you are a Malaysian applicant or foreign applicant.

FACILITY
Indicates the type of facility enjoyed with the various banks. Includes Overdraft, Housing Loan, Hire Purchase for scheduled goods, Leasing facilities, Staff Loans, Other Term Loans including personal loans, Credit Cards, etc.

TOTAL OUTSTANDING BALANCE (RM)
Indicates the outstanding loan amount of other credit facilities at current date.

DATE BALANCE UPDATED
The date where information on existing credit facilities is updated to BNM system.

LIMIT (RM)
The original loan amount approved, or if revolving credit facilities (such as credit cards or overdraft), the limit assigned for the credit facility.

PRINCIPAL REPAYMENT TERM
Whether the repayment frequency is Monthly, Quarterly, Annually, Revolving, or other frequencies.

COLLATERAL TYPE
Indicates the collateral type used by the bank to secure your credit facility. Includes <00> Clean facilities (no collateral), <10> Properties, <23> Unit Trusts, <30> Motor Vehicles, <60> Plant and Machineries, <70> Financial Guarantees, etc.

INSTALLMENT IN ARREARS FOR THE LAST 12 MONTHS
Most IMPORTANT part of the report, where the track record of conduct for each credit facilities for the past 12 months are indicated.

If it is indicated as “0” under January, it means your installment for January is paid before due date. If “1”, it means your instalment is 1 month in arrears (overdue) in January, “2” means 2 months instalment overdue in January, “3” means 3 months overdue and considered delinquent, etc.
If there are too many “2”s and “3”s and/or above, your conduct of credit account may be considered as “poor paymaster”, according to each bank’s interpretation.

LEGAL STATUS
Indicates the legal action status of your account if it is in default. The bank can know the action taken such as <10> Summon/Writ files, <11> Judgement Order, <12> Bankruptcy, <17> Winding Up order, <18> Auction, <20> Receivership / Section 176, <12> Settled / Discharged, etc.

DATE STATUS UPDATED
Shows the date of latest update on the legal action status.

How is CCRIS report being updated?

After discussing on how to do your own CCRIS check, we now want to know how CCRIS report is being updated.

In fact, CCRIS information is updated on the 15th of every month. So if you have paid down your credit lines anytime from 1-31 Jan, time your loan application submissions on the 16th of Feb.

In practical, issue crops up impacting consumer when the banks are delayed in updating their customers’ credit facility records to the CCRIS in a timely manner, despite the fact that the banks are supposed to do so on the 15th of each month.

Banks do have problems with their core banking systems (breakdowns, delay, heavy traffic, unable to close the end-of-month due to adjustments in accounts, etc) so there may be reporting delays.

Also, some banks default their system to classify a loan as due at different dates. Some banks classify the installment due after 5 days, 7 days or on the due date itself, depending on bank policy. This will all effect the bank’s reporting to their risk department. If a bank classify it as overdue 1 day after the due date, 80%-90% of customers will be on the due report for the Bank’s collection team. Usually, a grace period is given so that the report that the collection team gets is shorter and easier to manage.

In short, whatever that comes out in the CCRIS report will depend on how fast your bank report the account to CCRIS, as BNM only compiles whatever that have been reported to them.


What is Special Attention Account?

Loans reported under Special attention Account are loans that are non performing loans (NPL) that the financial institution has placed under special monitoring in view of recovering the loan or in the midst of collection. Loans under special debt management schedules such as negotiated by AKPK will also fall under here.

It could be due to dishonoured/bounced cheque incidents too.

You definitely don’t want to be ‘special’ when it comes to CCRIS report.

What can bank see when it check my CCRIS report?

Generally, when a Bank conduct CCRIS check, they will have access to various credit reports such as:

Summary Credit Report – Information on the total credit exposure and conduct of account of the customer

Detailed Credit Report – Information on the specific outstanding credit facilities and new credit applications of a borrower

Motor Vehicle Report – Information of motor vehicles which are used as collateral for credit facilities
Customer Supplementary Information Report – Information on the addresses, telephone numbers, employers names and occupation of the customer for the last 3 years.

However, as a consumer requesting the credit report directly from BNM, a consumer will only be able to obtain the Summary Credit Report, as a reference to the total exposure and conduct of the account.

How does bank define loan repayment due which appears in CCRIS report?

Certain banks classify it to be due after 1 day of the due date, but some classify it only after 14 days, or any other days. It will surely get classified if overdue for more than 30 days

If my credit application is denied by a financial institutions, does it mean that I am blacklisted?

No. Bank Negara Malaysia does not blacklist anyone as it does not express any opinion about the information in the credit report. Information on rejected credit applications is not provided in credit reports in order to ensure that a financial institution will not be prejudiced by the decision of another financial institution.

In processing loan application, the financial institution will perform a credit assessment on the borrower. This may involve background checks from various sources.  The information provided by the credit reference agencies will assist financial institutions in their evaluation. The financial institutions need to use all available data to help them make good decisions and be prudent in their loans and advances.

To improve your credit rating as evident in CCRIS report, you have to resolve this matter with your bank, and not from CCRIS (which is under Bank Negara)

Can I request a copy of my CCRIS report from the bank which I am applying a loan/credit card?

Normally, bankers or mortgage officers NOT allowed to obtain the report to give it to customers, because firstly, the Bank have to pay for such reports and therefore it is Bank’s property (for you, there is no fees to get the report). Secondly, the passing of such reports to customers is not part of the Bank’s job or approved services. Usually, banker can inform verbally if there is a problem with the payments record in the CCRIS, but usually, he/she would advise that you personally obtain your own report if you want to know the details.

Can the information in CCRIS can be viewed/abused by other party?

The CCRIS report information can only be accessed by authorised persons in the bank, and is not available to the public in general.

I am taking ASB loan maxed out at RM 200k to invest in ASB because ASB gives good interests which is more than my interest I am paying for the loan. Wise decision?

Not quite if you are going to take mortgage to buy real estate property.

ASB loan will show up as Personal Loan in CCRIS report. From a bank perspective, it may consider your monthly repayment commitment as such:

RM200,000 loan x 5% : RM10,000

This will affect your DSR (Debt Servicing Ratio) evaluation when you apply for big loans like mortgage.

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

Accounts under legal status (legal action being taken) or special attention accounts

Missed or late repayments

Utilization of credit limits (E.g. A high utilization of Credit Card or Overdraft limits is an indicator of poor finances)

High Debt Servicing Ratio (DSR). This is done via comparing your income documents against the total outstanding credit

Multiple active loan or credit applications. The more you applications you made, the more “desperate” you seem to banks. Sometimes credit approvers reject you application if they see that you have applied (and pending approve) several credit cards from several/many banks at the same time / or within a short period of time. The concern is that if the other application for credit cards get approved by the other banks at the same time, your exposure to unsecured credit goes up. So the bank processing the card now rejects your application. For example, you submitted credit card application for limit of RM 20,000 (if your salary is RM 6,500 per month) to 5 banks. In the CCRIS report obtained by the bank, it will show 5 application for credit submitted and pending approval, amounting to a total RM 100,000 unsecured credit limit. If all your application gets approved, this will make you a high risk applicant.

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

If you have high credit utilization, pay down some your credit lines before submitting a loan application.

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.

If you have known late payment records, wait 12 months (or at least 6 months) from your last known late payment record before submitting a loan application

Limit your amount of unsecured loan and credit applications. If shopping around, shop around first, then selectively apply for the best products. Contrary to popular practice, too many loan/credit applications actually hurt your chances of getting the best deals.

I really don’t think CCRIS report is good for the public.

Without CCRIS, we will go backwards 10 years in personal financing development. Back to the days where the only place you can obtain a personal loan is to have 1 or 2 guarantors, and security deposit requirements. Furthermore, you will have no chance to apply for a personal loan except at your own existing bank which has already your track record. Back in the days (80’s) where banks insist on “introducers” i.e. you cannot even open a savings account at certain banks unless your are introduced by an existing customer of the bank.

CCRIS check and reporting provides valuable information to Banks when deciding to grant unsecured financing, such as personal loan or credit cards. With CCRIS report, approvals for financing without guarantor, collateral and salary deduction requirements are possible. Banks are willing to take more risks only if they are able to understand the consumer behaviour backed up by reliable data. CCRIS check and reporting fits that role.

How to banks approve credit facility?

Generally, a bank will classify the applications received as Green, Red or Amber. Ultimately, green and red is no brainer. However, for amber cases, bank will try to improve approval ratio by going the extra mile to salvage it.

Normally from the total applications received per month, bank may get about 25% to 35% green cases (outright approval), 40% red cases (outright rejection) and the balance is usually Amber (KIV).

If during the month, the approval ratio is only 25%, the credit or sales team will re-look at the Amber cases to try to salvage it to increase the approval ratio to maybe 40%. Bank is a profit making organization with high acquisition costs. Thus, if its approval ratio is less than 20%, that means it spends money to market to 100 prospects but only getting business from 20 person; which is not good business sense. The ideal target approval ratio is 40% to 55%, which indicates a good efficiency KPI.

How does overdue outstanding PTPTN loan affect you?

The latest step taken by PTPTN is to list the borrowers in CCRIS. This will affect future purchase of house or any personal loan/car loan you apply from banks. When the banks check on the CCRIS and saw many months of bad repayment they will reject the loan.

There are 2 ways you can use that can ensure the applicants other loans can be approved.

Pay at least 50% of the loan amount. PTPTN will determine the amount and will then inform Bank Negara to delete the borrower’s bad repayment record. It will usually take 1 month.
Pay all. This will certainly delete all your record.
Payment of installment to regularise the account will not work as the record will still be there.  Do not do this on the last minute especially before buying a house.


What type of loans are easier to get approved?

Secured/collateralized loan such as mortgage. Unsecured loan such as credit card and personal loans are categorised as a very high risk product (which also give high returns). As such, the credit criteria is the most complicated, sophisticated and most strict among the Bank’s products.

Source : BNM Credit Bureau
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