A credit score displays your financial health as an easy to understand number. This makes it extremely easy to understand, providing a visual representation of your ability to handle money.
Unlike a physical health check, people tend to only think of their credit score when they need to fulfill a financial obligation. For instance, when applying for a personal loan or credit card.
In daily life, this number is forgotten. Pushed to the back corners of our memory to be hidden behind rarely used information like phone numbers or wedding anniversaries.
Despite this, there are some benefits to regularly keeping an eye on your credit score. Especially if you’re trying to raise it to increase your chances of being approved for that home loan or if you’re especially paranoid about becoming a victim of financial fraud.
What checking your credit score tells you
It’s helpful to think about your credit score as a financial report card that needs to be checked at least twice a year. This is the best way to know how well you’ve actually been handling your finances.
A decreasing score could signal increasingly reckless behaviour and help you correct it before it becomes a problem. Alternatively, a rising score can be a morale boost in showing that your efforts are paying off.
Like a proper report card, some credit score reports will also provide details about anything you might be doing wrong. It might be something as harmless as a couple of bills you forgot to pay, or it could end up highlighting a more deep-rooted problem, perhaps a past financial obligation like becoming a guarantor for a bank loan more than a decade ago that has defaulted.
Help protect yourself against identity fraud
Ever wonder why data breaches are such a big deal? Especially when millions of Malaysians have their IC numbers and home addresses exposed?
The answer is identity fraud. Cybercriminals taking loans and credit cards using the identities of other people, and then leaving their victims with the bill.
Of course, the victim has no idea this has happened, and will end up having to deal with banks long after the fraudster has run off with his ill-gotten gains.
Some credit score reports will provide a list of what financial products currently have your name on them. This tells you how much you owe to any banks, and if there are any credit card payments that you missed. It will also let you see if there are any irregularities; such as a credit card that you don’t remember owning or a personal loan you never applied for.
Being warned early could help you get to the root of these problems before they get too big to control.
Catch errors in your credit score
Speaking of being warned early, regularly checking your credit score can ensure that you notice any mistakes from the bank. Financial institutions are staffed by regular people, and to err is only human.
You cannot fault someone for keying in the wrong information or forgetting to note that you’ve paid your bills, but you can let them know that they need to fix it. This could be a simple way of sorting out problems with your credit score as well. After all, it could be a simple clerical error that’s been holding your score down.
Check your credit score
In Malaysia, your credit report is stored in the Central Credit Reference Information System (CCRIS). The CCRIS is managed by the Credit Bureau under the central bank. It records all your loans and credit information of the past 12 months. This report is made available to the individual, and also all the financial institutions in the country. You can apply for your credit report through CTOS, Experian and Credit Bureau Malaysia.
Your credit score report is like your adult report card, it gives you a snapshot of how you are doing financially and whether you should work on improving your financial health.