Credit Basics

Are You Credit Wise?
What do I need to know about credit?
The Basics are, well, basic. Follow these four pointers and you’ll be off and running.
1. Look for hidden costs.

When applying for a credit card, look beyond “No Annual Fee” for hidden costs. There are other fees that can cost you more in the long run. For instance:

  • Late Fees. Most cards charge fees when payments arrive late. Most issuers have a set fee, while others charge a fee based on the amount of outstanding balance on the card. Paying late fees just twice in a year could cost more than an annual fee - so take every step to ensure your payment arrives on time.

    Banks in Malaysia monitor the credit cardholders’ payment record for the 12 consecutive months to determine their repayment track record. Based on the track record, one of three Tier rates will apply under a tiered interest rate system unique to Malaysia. With the Tier rates, credit card members are encouraged to continuously make at least the minimum payment of 5 percent of the amount outstanding within the due date in order to stay at Tier I at all times or, as the case may be, move from a lower Tier to a higher to enjoy better interest rates with a steadily improving repayment track record.

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  • Over-Credit-Limit Fees. If you charge more than your credit limit, most issuers charge a percentage, such as 5%, of the amount you are over your limit.
  • Lost Card Replacement Fees. Some issuers charge cardholders whose cards have been lost or stolen more than once or twice. The fees are subject to individual banks charges.
2. Build good credit.
  • Always pay your bills on time.
  • Keep balances low on "revolving credit" (i.e., credit cards).
  • Pay off debt instead of moving it around.
  • Do not close unused credit or store cards as a short-term strategy to raise your credit score.
  • Don't open lines of credit that you don't need.
3. Get the FAQs
The answers to some of the most common and most important questions – from whether you are guaranteed a card after being pre-approved to are here.
Your Credit Report - What is it?
Your credit report contains detailed information on your credit history, including identifying information, credit accounts and loans, bankruptcies and late payments, and recent inquiries. Prospective lenders (any institution that lends you money in the form of loans and financing or issues you credit) can obtain it to help determine your credit-worthiness. Your credit report is actually one of the main factors used by financial institutions to make assessment on the credit facility application. The financial institution is required to inform you (the applicant) in writing that a credit check is to be conducted under your name and the credit application will be reported to the Credit Bureau of Bank Negara Malaysia also known as Credit Bureau of Central Bank of Malaysia. Using the same information from the credit report and other sources, one lender may approve an application while another may not. Because of this it is very important that you make sure your report is updated before submitting credit applications.