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5 Ways to Build Good Credit History as a Student

Published by Afterschool.my on Apr 20, 2017, 04:00 pm

When you’re a young college or university student in Malaysia, you might not have gotten the exposure to a comprehensive education in managing your personal finances.

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Well, the good news is that you’re not alone. The bad news is that many young students end up facing financial difficulties when they step out into the real world for the first time.

While they might know a few basic money tips, many are clueless when it comes to understanding the true importance of credit ratings. In short, the credit rating is the estimation of an individual’s capability of fulfilling his or her financial commitments, based on previous dealings or the credit history.

A good credit history is a crucial determining factor when it comes to borrowing money from the banks, which also entitles you to lower interest rates.

Your credit rating and history is used for:

  • Borrowing money (to buy a car, a house, or to start a business)
  • Employment screening
  • Rental applications
  • Credit card applications
  • Calculating car insurance premiums

Here are a few ways that you can use to start building a good credit history as a student.

1. Pay Your Bills Promptly

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Being able to pay your bills on time gives you the credibility you need to impress your bank. Having a history of late repayments will taint your credit report generated by the CCRIS under Bank Negara Malaysia, which is accessible to every bank in the country. Settle any outstanding bills, regardless of how small or insignificant they may seem to be

2. Invest For The Future

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Having an investment or owning several assets in your name can greatly improve your credit score. Savings deposits and investment properties are reliable indicators of your current financial state, which allows banks to have a better assessment for the purpose of a loan issuance.

3. Limit Your Credit Applications

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Banks take it as a warning sign when they notice that you have a tendency to apply for new loans every now and then, as this implies that you are facing financial problems. You can avoid this by limiting the number of times you apply for loans or credit within a short period of time. Or you may consider borrowing from a trustworthy source that doesn’t affect your credit history, such as your friends and family.

4. Pay Off Your Debts

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Clearing off debts can help you to generate better credit ratings. For example, pay down as much as you can for your debt, or pay off any outstanding balance in full, if possible. If you own more than two credit cards, it is advisable to reduce the number or to consolidate them.

The banks have access to information of almost all your debt obligations, so it is best to keep tabs on your borrowings at all times. If you are unable to pay off your credit card balances in full, ensure that you are able to settle at least the minimum payments in order to keep your credit rating healthy.

If you do not own any credit card, consider applying for one that offers you a low interest rate with low or no annual fee. Examples of such credit cards are:

1. Hong Leong Wise Gold card

2. Maybank 2 Gold Card AmEX

3. Maybank Islamic Ikhwan AmEX

4. BSN Classic Visa Credit Card-i

5. UUM-BSN Gold Credit Card-i

5. Get Started, Right Now!

The longer your credit history is, the more accurate and credible your credit rating will be. If you have recently graduated from a university, you will have a limited credit history and a lower rating. This, however, grants you the opportunity to build it over time in the smartest way possible. As a tip, consider keeping an older account active, regardless of whether or not you are still using it.

Most PTPTN loan borrowers are required to have a CIMB account, which is usually disregarded after graduation. Keeping such accounts active can assist those with a short credit history, so it is highly advisable to use them from time to time, especially when there is no annual fee involved.

Remember: Your credit rating is a reflection of your ability to borrow and return money responsibly. The higher the rating and better your credit history is, the better. For more useful financial articles, visit CompareHero.my to learn more about money saving and other finance-related tips.

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