CTOS, in collaboration with the Monash University Malaysia (Monash) School of Business, has released a summary of CTOS State of Consumers Credit Report for Malaysia 2022. Using a sample of over 1.4 million individual CTOS users, the study shows a positive increase in the average CTOS Scores over the past three years from 663 to 678.

The CTOS Score is a 3-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% also demonstrates that consumers in general, did not have to increase unsecured credit spending to survive the difficult period.

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.

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% of the population has a credit profile, or Thailand, where a recent study by FICO showed that 67 percent of Thai consumers were not satisfied with generic credit offers from their bank, due to lack of credit scoring.

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.

Furthermore, there are also 28.3% of consumers that fall below the “Fair” rating, meaning that they will be unable to obtain credit from the mainstream lenders, putting them at risk of falling prey to illegal lenders that often provide credit with exorbitant interest rates. This means that financial education is still crucial for over a quarter of consumers in Malaysia, while the importance of maintaining financial health is a factor for the remaining population.

“At CTOS, our mission is to empower individuals and businesses alike to gain access to credit and take control of their financial futures. We strongly believe that everyone, irrespective of their background or financial standing, deserves the tools and resources necessary to manage their credit health effectively which is why we developed the CTOS self-check service,” explained Erick Hamburger, group CEO of CTOS Digital.”

We have also carried out around 150 financial education programmes in the last 3 years together with various organisations including the Ministry of Finance, Bank Negara Malaysia, AKPK, EPF, KPKT and NGOs. Through these initiatives, we provide consumers with the opportunity to learn, engage, and strengthen their financial management skills, empowering them to improve their credit health and personal finances”

The report also includes other statistics comparing generational creditworthiness, average outstanding loan balances by income group, type of credit facilities and more.

Head of Monash School of Business, Professor Dr Nafis Alam, said the statistics revealed that during the difficult times, the lower income group (B40) had a higher credit card utilization of 34.2%, considerably higher than the national average of 23.7%, 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 behavior,” he added.

Join our Telegram channel to receive latest news alert