In Malaysia, creditworthiness plays a crucial role in determining an individual's loan eligibility and interest rates. Financial institutions assess credit scores generated by credit reporting agencies like CTOS Data Systems Sdn Bhd and the Credit Bureau of Malaysia (CBM). While both CTOS Score and CCRIS Score are used to evaluate creditworthiness, they have key differences. In this blog post, we will explore the variations between CTOS Score and CCRIS Score and their significance for borrowers.
1. Data Sources:
One of the primary differences between CTOS Score and CCRIS Score lies in their data sources. CTOS Score gathers credit information from various sources, including financial institutions, telecommunication companies, and utility providers. This broader range of data contributes to a comprehensive credit assessment. On the other hand, CCRIS Score is generated solely from the Central Credit Reference Information System (CCRIS), which consists mainly of information from financial institutions. Thus, CTOS Score provides a more holistic view of an individual's creditworthiness.
2. Credit Information Inclusion:
CTOS Score and CCRIS Score differ in the types of credit information they include. CTOS Score incorporates data on loans, credit cards, and other credit facilities, as well as non-banking accounts like telecommunications and utilities. This wider coverage gives financial institutions a more comprehensive understanding of an individual's overall credit behavior. In contrast, CCRIS Score primarily focuses on credit facilities provided by financial institutions, including personal loans, mortgages, and credit cards.
3. Credit History Length:
CTOS Score and CCRIS Score also diverge in terms of credit history length. CTOS Score includes credit information spanning up to the past 12 months, allowing financial institutions to assess an individual's recent credit behavior. This feature is particularly beneficial for borrowers aiming to improve their creditworthiness in a short time frame. Conversely, CCRIS Score provides a more long-term perspective, considering an individual's credit history over the past 12 to 60 months, depending on the loan facility.
4. Handling of Defaults:
Another distinction between CTOS Score and CCRIS Score is the way they handle defaults or missed payments. CTOS Score considers historical defaults, providing financial institutions with insight into an individual's payment behavior. This information helps lenders assess the borrower's risk profile more accurately. On the other hand, CCRIS Score focuses on recording the default status of credit facilities, with no specific details about individual payments within those facilities.
5. Credit Scores Calculation:
The methodologies used to calculate CTOS Score and CCRIS Score also differ. CTOS Score employs a proprietary algorithm that assigns a score ranging from 300 to 850, with higher scores indicating better creditworthiness. The algorithm considers various factors such as payment history, credit utilization, credit inquiries, and public records. In contrast, CCRIS Score uses a risk grading system ranging from 1 to 10, with lower scores representing a higher credit risk. This risk grading is determined based on the individual's repayment behavior and the level of credit exposure.
Conclusion:
Understanding the differences between CTOS Score and CCRIS Score is crucial for borrowers in Malaysia. While both scores assist financial institutions in assessing creditworthiness, they vary in data sources, credit information inclusion, credit history length, handling of defaults, and credit score calculations. CTOS Score provides a more comprehensive view of an individual's credit behavior, including both banking and non-banking accounts. On the other hand, CCRIS Score focuses primarily on banking credit facilities. Borrowers should be aware of the nuances of both scores and maintain responsible credit behavior to ensure a positive credit history across multiple sources.
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