Friday, September 3, 2010
Is Your Personal Credit in Good Shape?
In my previous post entitled Property Investment Strategies in the next 6 months, getting your personal credit in good shape is the first strategy. Here is a story that I wish to share about my friend who did not do that.
My friend, G, has always been a good paymaster. Whether it is her house rent, car instalments, or credit card debts, she would just pay on time. She also has a long standing relationship with a certain bank, where her salary goes into, and her active transactions in the current account also show a great record.
G decided to buy a home, instead of renting. She had just got a good bonus from her company, and coupled with her savings, it was just enough to for the downpayment of a nice, cosy condominium in Kuala Lumpur for herself and her parents. She decided to apply for the loan from the bank (where her salary goes into) which she has good relationship with, and when the banker saw her good record from the bank's internal data, she was told that she should have no problems getting the loan for 90% margin of financing. So she went ahead and made the 10% down payment and signed the S&P agreement.
So, imagine her shock when she was told by the bank later that her CCRIS record was a concern. It showed lapsed payments in Jan and Feb 2010 for a car that she owned. Then only she realized what had happened. G had a car which she sold to a distant relative. As there were only 2 more years to pay for the hire purchase loan, the relative persuaded her to let him "sambung bayar" (continue to pay the instalments under G's name), so that he need not go through the hassle of applying for another loan. G agreed. She received a lump sum for the car, and the balance payment was through the relative bearing responsibility for the remainder instalments. But the hire purchase loan was still in her name. So her CCRIS record was damaged, and her bank declined her application for the home loan.
All other banks looked at her CCRIS record, and rejected her application. She had no choice but to apply from MBSB, which she was told could close an eye on her CCRIS record. She had the disadvantage of having to take up an unattractive loan interest rate. On top of that, for some reason, MBSB or its lawyers work very slowly (unlike conventional banks), thus delaying the loan disbursement to the vendor of the condominium, and the very irritated owner threatened to charge her interest for late disbursement.
What a lesson to learn. Just one small act of kindness, to a distant relative, resulted in so much monetary hassle for herself. And this has long term consequences, imagine being stuck with a high interest loan for 30 years!
G thought: "I have been a good paymaster all my life. The only thing I didn't do was I didn't check my relative's money habits and I brought all this trouble on myself."
Photo courtesy of Equifax.