7 Things I’ve Learned About Credit Card Scores So Far
If you haven’t gotten a credit card, make sure you are capable to manage your financials before you apply for one (or more). If you are looking to get loans or more credit cards, it’s important to keep your scores good. Aside from all the other professional information on the internet, here’s my experience of why it matter and how to build it.
Why do you need good scoring?
1. Good Score = Everything Goes Smoothly
Believe it or not, a longstanding good score really does make a difference in many things, especially when it relates to credit card and loan applications.
2. Relating to credit cards
Having a good credit score helps to speed up your next application and even boosts the possibilities for more credit limits. Besides, just because you earn a lot doesn’t mean you can immediately get higher ranking cards.
Getting a new credit card also tanks your score or cause a dip in it because of the new credit limit. So, this means you will need some time to rebuild it back. Not so great when you don’t have enough time before the next application submission.
3. Relating to loans and mortgage loans
A good score means you are a reliable borrower. Bankers will check by looking at your payment records to determine if you are credible enough to be borrowing money from them.
For mortgage loans, a good credit score may be enough if you have sufficient salary for a simple loan with lower amount. However, if you are getting anything above RM500-650k, some banks will look at your credit card usage duration, specifically your first credit card. I was told by some bankers that loan wouldn’t get a better margin or interest solely because my credit card usage duration is not enough as I had only started getting one about 2 years ago and it’s too fresh of a record.
4. Better interest rates, maybe.
A good scoring may also help you to get lower interest rates (and/or higher loan margins). Then again, other variables may influence the final rate.
How do you get a good scoring
1. Maximum of 30% usage for your total limit
The general rule of thumb is to maintain your usage below 30% of your total credit limit. Of course, the lesser the better, just make sure that you pay on time. The final usage amount is determined by the statement generated and sent to you, so any amount that you have paid off earlier might not count.
2. Try not to pay only the minimum amount
Paying off the full statement amount is the best way to go.
If you struggle to meet the date, you can consider to change your statement due date by contacting the customer support. They will let you know what you need to do. In my case, one of my bank requested me to apply for date change around the due date of my statement.
3. Check your scoring to understand better
This isn’t sponsored: getting a CTOS report would help you understand where you are at the moment. You can subscribe to the CTOS Secure ID monthly/yearly subscription to get full reports about your credit score. You can even see other things like whether you have been paying on time, fraud protections and data breach, new credit limit request submitted, and also fraud & takaful coverage. It was RM89.90 but I noticed that it has been revised to RM99.90 now.
Highly recommending you to check out the professional information available online and also self-assess your capabilities to self-discipline your spending before getting a credit card because you could easily slip away and get yourself into more debt, either by spending too much or stacking up too many instalments.
Disclaimer: I am not a professional. I am merely expressing my genuine experiences.
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