Applying for a loan from a bank can be quite easy and challenging at the same time. If all your documentation are fine, you should not have any problem getting the loan approved. Right? Sadly, that is not always the case.
Bad credit score
In Malaysia, you can have less than favourable credit score even if you are not having debts. In fact, if you have no debts at all, you might not get a loan approved because you are not qualified. The reason for this is because your score is too low. So, either you have too many debts or you too little, they would both end up with you having poor credit scores. So what can you do?
High debts and cannot get out
A lot of Malaysians are facing this problem. Being neck-high in debts and unable to get out. You maxed out your credit cards and took out loans to cover another loan and yet you are going around in circles. If you do not mend this situation soon, your poor credit score will continue to add up. So, you need to get your debts under control.
- Consolidate your debts – You can either take up one large loan to pay off all your other loans and credit card balances. With one account, it makes it easier to manage. You will reduce the risk of missing out on payments.
- DMP – Alternatively, you can take the Debt Management Programme under AKPK to help you consolidate your debts. This however has consequences as it would mean you will not be able to get any loans until you pay off whatever you own the banks.
Poor credit rating due to no credit history
On the other hand, you might find it hard to get a loan because your history is too ‘clean’. Fresh graduates will face this situation as well as certain individuals who have recently gotten out of a debt consolidation situation. The banks might be concerned about giving you a loan because of your situation (that also includes your age). So, what could you do about this?
- Get a credit card – This is much easier than getting a loan. You basically start creating a credit history here. Getting a credit card can be very straightforward as you can get it approved through the pop-up stores in shopping malls, etc.
- Start spending – No one is asking you to use up all the credit you have in your card. Use it for your expenses (be sure to pay them off).
After that, you will start having a credit history which will be tracked by Bank Negara Malaysia. When you apply for a loan, the banks will check this against your record which shows you have a good payback record.