Making the best of credit ratings
Cheah Chor Sooi | 08 Sep 2017 00:30
Credit score is commonly used by financial institutions to conduct credit assessment on individuals or smaller business loans. Using a consistent scoring/rating system will enable banks to automate their decision-making process in view of the high transaction value and volume of loan applicants.

Although a similar credit score concept can also apply to listed companies – more profoundly known as credit rating – it typically serves as one of the many criteria in the context of credit assessment alongside other factors which include business operations, management strength and business track record.

Very broadly, credit reporting agencies (CRA) such as RAM Credit Information Sdn Bhd (RAMCI) usually have large information databases of individuals and businesses which are listed companies.

This enables RAMCI to provide access to credit information tapped from the Companies Commission of Malaysia (CCM) such as capital structure; shareholders’/directors’ profile; company encumbrances; financial information; credit information such as past litigation history, bankruptcy and legal suits; conduct of payment with banking as well as trade creditors.

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