KUALA LUMPUR, March 10 — A study by CTOS, country’s leading credit reporting agency, in collaboration with the Monash University Malaysia (Monash) School of Business showed that Malaysians’ consumer credit score has continued to improve.
Using a sample of over 1.4 million individual CTOS users, the CTOS State of Consumers Credit Report for Malaysia 2022 showed a positive increase in the average CTOS Scores over the past three years from 663 to 678.
The CTOS Score is a three-digit number that represents a consumer’s creditworthiness based on the individual’s payment and management of his/her credit. It ranges from 300 to 850. The higher the score, the higher the chances of securing credit.
“Despite the pandemic, financial health has managed to hold steady within the ‘Fair’ credit range which is viable for credit applications.
“Credit card utilisation maintaining a rate of around 24 per cent also demonstrates that consumers in general, did not have to increase unsecured credit spending to survive the difficult period,” it said in a statement yesterday.
While generally, a score of 678 means that most Malaysians will be able to qualify for financial products at some degree depending on the risk appetite of each lender, they may not get the best credit deals on the market as compared to those with ‘good to excellent’ credit scores. The ‘Good’ credit range starts at 697.
In comparison with other countries on the global stage, Malaysia still has some way to go compared to the US which has an average credit score of 716, the statement read.
However, in the South-East Asian region, credit scores are a relatively new concept, with credit bureau penetration being much higher in Malaysia than its neighbours such as Indonesia, where only 20-25 per cent of the population has a credit profile, or Thailand, where a recent study by FICO showed that 67 per cent of Thai consumers were not satisfied with generic credit offers from their bank, due to lack of credit scoring.
Group CEO of CTOS Digital Erick Hamburger said at CTOS, their mission was to empower individuals and businesses alike to gain access to credit and take control of their financial futures.
Meanwhile, Monash School of Business head Prof Dr Nafis Alam said the statistics revealed that during the difficult times, the lower income group (B40) had a higher credit card utilisation of 34.2 per cent, considerably higher than the national average of 23.7 per cent, in order to sustain their finances.
“Besides income group, the trends also show that the younger generation (Gen Y & Z) used credit cards more than before possibly due to social preferences, which resulted in increased spending behaviour,” he added.
— Bernama
