This article first appeared in Personal Wealth, The Edge Malaysia Weekly on April 15, 2019 - April 21, 2019

In Malaysia, applying for a loan or credit card is not a complicated process. Many are not concerned when their applications are rejected a lender as they believe they can easily apply again elsewhere. However, this may not be a good idea as the inquiries made the lender when processing the application could negatively affect their credit scores.

Rian Philip, founder and CEO of MoFintech Sdn Bhd, says the impact can be significant, especially if they are making several applications at once. “The problem is that there are many things people do not understand about their credit scores and how their actions could affect them.

“For example, a person who thinks he barely qualifies for a certain credit card may apply at five different lenders to increase his chances. Little does he know that his credit score has already declined, whether the applications are approved or not.

“Applications give lenders permission to pull their credit scores. These inquiries affect one’s credit score, especially if the applications are subsequently rejected.”

To help Malaysians maintain a good credit score while efficiently applying for credit facilities, Philip has introduced Mobylize — a mobile app that allows individuals to access their credit scores in real time and thereafter match them with the right financial products and services for which they have a higher chance of obtaining approval. downloading the app, users are able to access their credit scores and brief information on their credit history for free, provided Credit Bureau Malaysia (CBM).

“We are the first app in Malaysia to give users real-time scores. There is a credit reporting agency that does it through an app, but users have to wait about 30 minutes for verification to take place. We can do it in real time because we have a secure server-to-server connection with CBM,” says Philip.

After obtaining their free credit score, users are presented with personal loan products and credit cards that would be suitable for them based on their score. They can make an in-app application for these facilities. Since the app already has the user’s basic credit information, the user does not need to fill in a lot of forms.

“When users apply for credit facilities via the app, we send them a link to a pre-filled application form for them to verify. Once the users approve the form, we will send it over to the banks to process,” says Philip.

“Currently, banks still need to call users if they need any additional information or to inform them of the status of their application. However, we will roll out an update in the middle of this year that will allow all stakeholders to engage only on the app. So, there will be no need for users to do anything outside the app.”

He plans to make this process more seamless also allowing users to apply for home and business loans directly via the app.

From time to time, users of the app will be asked lifestyle-related questions to help the algorithm understand the user’s lifestyle factors that go beyond a credit report. This includes questions on their income, saving habits and spending patterns. With the information, the app will be able to provide more customised tips and personalised recommendations to users, says Philip.

“We are continually engaging with users, drilling deep to check their eligibility. So, their chances of getting approval for a recommended product is slightly higher. Of course, the party making the final decision is still the lender. But we are trying to make the back-end process smoother and more efficient.”

The list of banks that offer products on Mobylize include Al-Rajhi Bank, Bank Muamalat, RHB Bank, and CIMB Bank. Philip and his team are working to expand this list and provide users with more product choices.

Mobylize is currently experimenting with several features, including facial recognition for the onboarding process. It is also translating the app into Bahasa Malaysia to be more inclusive.

“I have noticed that all the credit reports are in English. I think it will benefit a lot of Malaysians if we provide them with information in a language they understand better,” says Philip.

Helping Malaysians to be credit positive

Philip is focusing on getting Malaysians to understand their credit scores and how these affect them. He says that based on a 2016 survey CTOS Data Systems Sdn Bhd and iMoney, it is alarming to know that 67% of Malaysians have never seen their credit reports. Also, according to several news reports last year, about 47% of young Malaysians were in very bad credit debt and more than 60,000 Malaysians aged between 18 and 44 had been declared bankrupt in the last five years.

Mobylize will run a “Get Credit Positive” campaign with CBM next month to educate Malaysians on how they can improve their credit scores, says Philip, who does not want to stop at feeding users just content-based information. He wants to recommend appropriate actions they can take to develop better credit scores.

“Let’s say they have a few credit cards. There is such a thing as credit utilisation ratio. It is not good for them to max out one card and use only 10% of the other cards. Via the app, we will probably suggest a credit card that gives them 0% transfer balance with a higher credit limit,” says Philip.

“If their credit card has a credit limit of RM10,000 and they have used RM9,000, they have 90% exposure from the credit card. If they get another credit card that has a credit limit of RM20,000, they can reduce their exposure from the first card to only 40% when they transfer some of the balance [to this card]. This will improve their credit score.”

During the campaign, the app will also recommend that users terminate credit cards they never use, he adds. For thin-file users or those without enough credit history to generate a credit score, the app will suggest ways for them to start building their credit history and inform them why it is necessary.

The app currently generates revenue from bank referral fees when users apply for credit facilities through Mobylize, says Philip. He adds that he has no intention of charging users for the credit information provided on the app. He thinks this is important as it brings a lot of value to the users if he takes away this barrier to understanding their credit scores better.

“Users had to answer security questions based on their credit report when registering for the app. Recently, a user told us he was asked whether he had an overdraft facility. He answered no, but he was wrong. His bank had actually converted its credit card annual fee to overdraft and he had no idea about this. If he had not registered for Mobylize, he probably would never have known. I want to help people like him. That is why we do not impose a fee,” says Philip.

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