1. Research, research, more research!

Before you apply for an online loan, do your due diligence first. Read reviews on the internet, get wind of what people are saying about the credit company on social media, check if they are registered under the Ministry of Urban Wellbeing, Housing and Local Development (KPKT), and always read their policy’s fine prints if available. Spend some time diving deep and comparing your choices because it’s easy to get swept up by good offers without making sure that there are hidden fees behind every good product feature.

2. Do they conduct credit checks on you? Good.

One thing that banks and non-banks financial institutions have in common in terms of their financing procedure is checking your CTOS and CCRIS records. Have you missed paying for your credit cards or student loan? Have you paid all your arrears in the last 12 months? Is your credit report healthy? Credit checks are important because it will convince your credit company to approve your loan if they are sure that you are able to pay your loan in time. If your credit company does not do any credit checks on you, walk out the door immediately.

What are CTOS and CCRIS?

CTOS is short for Credit Tip-Off Service, Malaysia’s leading Credit Reporting Agency (CRA) permitted by Bank Negara Malaysia, created by CTOS Data Systems Sdn. Bhd., a private credit reporting agency. Its purpose is to summarise your creditworthiness based on your credit history. It will show you your CTOS score in the range of 300 (poor) – 850 (excellent). The higher your score, the lower your credit risk value, the easier your loan will be approved.

On the other hand, CCRIS is short for Central Credit Reference Information System, managed by the Credit Bureau of Bank Negara Malaysia. Its sole purpose is to collect credit-related information and provide credit reports to banks and financial institutions in Malaysia. This is how banks and financial institutions determine your creditworthiness and whether your loan or credit card application will be approved or not.

3. They want upfront payment? Get out of there ASAP!

All registered money lenders under KPKT are tied to the Moneylender Act 1951. Under Moneylender Act 1951, Section 23, “[a]ny moneylending agreement between a licensee and a borrower or intending borrower for the payment by the borrower or intending borrower to the licensee of any sum on account of costs, charges or expenses…shall be illegal.”

In simple terms, the moneylender shall not charge extra expenses on the borrower except as prescribed in the loan agreement. But, when and if stated in the agreement, the borrower will bear all stamp duties and attestation fees, usually will be deducted from your total loan.

4. Vigilance is key.

The most important part of this article is being vigilant. Always do your due diligence before applying for anything, online or offline. If you feel hesitant or start to question your credit company, cancel your application if you haven’t put down your signature on your loan agreement. Trust your gut. They always save you when it matters

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Takeaway: Always research the companies you plan to borrow from and make sure that it’s legit. Make sure that they conduct a credit check on you by asking for your CTOS and CCRIS reports. If they ask for upfront payment, they are most likely loan sharks. But most importantly, always be vigilant when it comes to loans, because scammers are everywhere.