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How PTPTN affects your credit score!

The National Higher Education Fund Corporation, or better known as PTPTN, has made news once again!

At Budget 2019 recently, the government announced a repayment schedule that would have borrowers paying back between 2% and 15% of their income if their salaries are higher than RM1000 per month. The news came as a bit of a shock. It appears the country is divided by those wanting PTPTN loan holders to pay their dues, and those that want to hold the government to their promise of deferring payment for those earning less than RM4000, as promised in the Pakatan Harapan’s manifesto.

Some students have also walked to Parliament in hopes of handing over a memorandum to protest against the new PTPTN repayment schedule.

But what would happen if a borrower refuses to pay their PTPTN loan? No big deal, right?

Au contraire! The repercussions are real and can be devastating to an individual’s opportunities for employment or even owning a car or a house.   

While the most publicised consequence for PTPTN defaulters is a travel ban, what most people don’t know is that it can also affect their credit score, which in turn, can play a part in their employability.

As all Malaysians have their credit and loan information stored in a database managed by Bank Negara, a person’s history in PTPTN repayments are shared to lending institutions and banks nationwide. Therefore, repaying your PTPTN loan on time will positively influence your credit score. On the flip side, late repayments or defaulting on your loan could taint your credit score as an untrustworthy borrower, which may result in rejection of future loan applications.

This can be a point of concern for organizations looking to hire, and therefore greatly impacting your opportunities for gainful employment. Unfortunately, there are many who take their credit score for granted.

In a background screen, organizations can make up their minds about a candidate’s reliability just by checking their credit scores. Based on how the candidate has managed his/her debts and finances, credit scores offer employers a way to determine if there are issues to address, such as bankruptcy, credit mismanagement and late fee payments.

Organizations can use background screening and credit checks to identify if a person is trustworthy and responsible around corporate finances and assets and is in overall sound financial health so as to prevent risks of corporate theft. Unnoticed, the person may conduct unsavoury practices within the company right under your nose!

Employability issues aside, the PTPTN serves a very important purpose by providing study loans to students pursuing their tertiary education in Malaysia. Through their services, thousands of Malaysians have had the benefit of pursuing a higher education as the agency provides a temporary solution to pay for college and university fees.

It is important that every Malaysian that has borrowed from PTPTN should be held to their promise to repay their debts. Not doing so would be robbing future generations of the same opportunity to higher education, especially if the agency is ultimately shut down.

It is only fair that we do our part to repay debts and to hold those accountable for their actions, including those in the workplace! And it pays to know that the people under your employ are reliable individuals to safeguard your organization and its assets.

Unsure and want to know more about screening your employees? For more information, check out our previous articles here or stay tuned to for future updates.

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