A basic understanding of a credit score is a rating system applied by banks to see a prospective borrower’s viability or capacity for the loan they are proposing.

Someone must have a credit history or credit application history as one of the considerations for accepting a loan application from a debtor to a bank.

This credit history reflects a person’s credit score. The higher a person’s credit score is, the easier it will be for banks or other financial institutions to accept their loan application.

A person’s credit score is denoted by the numbers from 300 to 850. This means that if the credit score is above 720, the customer is in good or safe criteria to apply for credit.

Meanwhile, if your score is below 640, it will become a concern of the bank, making it quite difficult to apply for a loan. Below is a further explanation regarding credit scores that prospective borrowers should know before applying for a loan:

How to find out credit score

Every loan application to a bank requires someone’s BI check or credit score check at Bank Indonesia. The BI check is definitely done for applications for unsecured loans (KTA), home ownership loans (KPR), motor vehicle loans (KKB), or credit cards. BI Checking is individual debtor information that records the smoothness or failure of a person’s credit payments.

So that it becomes a determining factor in the eligibility of potential borrowers to obtain a loan. BI check can be done by financial institutions on the official website of Bank Indonesia through the page https://www.bi.go.id/id/LIP/contents/formulir.aspx which includes the Debitor Information System, a system which stores the identity of the debtor, the facilities for providing funds or loans received, guarantees, guarantors and enforceability or regular credit payments.

However, based on information from the Financial Services Authority (OJK) website, as of January 1, 2018, BI Checking or SID changed its name to Financial Information Service System or SLIK, operated by OJK.

(Read also: Tips to avoid illegal online loans)

SLIK services at OJK

Therefore, debtors can now obtain or check credit quality records with the Debtors Information Service (iDEB) via SLIK. Several things that need to be known about iDEB through OJK’s SLIK service include:

• This service is free. Therefore, be careful of people asking or raising funds.
• The whole SLIK support process takes only 15 minutes (5 minutes for printing and 15 minutes for printing with iDeb explanation)
• Requests for information through the SLIK service must not be represented to maintain the confidentiality of personal data. But if you can’t collect the data yourself, then you can be represented by making a power of attorney with a 6000 stamp, the original identity card (KTP) of the debtor, and the original KTP of the attorney.
• Prepare original ID cards, Indonesian Citizens Identity Cards (WNI) or Foreign Citizens Passport (WNA) for individual debtors, while Business Entity debtors are required to bring a photocopy of the Business Entity Identity and the identity of management showing the original identity of the corporate entity.

So, in order to get iDEB through this SLIK, you need to go through several steps. Among other things, debtors apply to OJK with the supporting documents and fill in the debtor application forms at the address at Radius Prawiro Tower 2 Floor, Bank Indonesia Office Complex. Jl. MH Thamrin No. 2, Jakarta or Regional Offices or Local OJK Offices.

The supporting documents required for this submission include photocopies of identity in the form of KTP for Indonesian citizens and passports for foreigners if the submitting debtor is an individual debtor.

So for the business entity debtors, you need to complete a photocopy of the business entity identity and management identity by showing the original business entity identity in the form of NPWP, deed of incorporation of the company, and the latest statutory amendment.

Subsequently, send the form or supporting document to the OJK officer and after fulfilling the requirements, OJK will print the iDEB results. Subsequently, OJK confirms and sends the iDEB results to the applicant along with a signed receipt from the applicant.

Category levels in credit scores

A person’s credit score is divided into five rating categories, including:

• Score 1: current credit, which means that the debtor always meets his installment payment obligations every month together with interest until paid off without ever being in arrears
• Score 2: DPK credit or credit with special mention, which means that the debtor is registered as arrears on credit installments from 1 to 90 days
• Score 3: Non-current credit, which means that the debtor is in default on credit installments of 91-120 days
• Score 4: Doubtful credit, which means that the debtor is registered as a defaulter on credit installments of 121-180 days
• Score 5: bad credit, which means that the debtor has been past due on credit installments for more than 180 days

This credit score is recorded if someone has a bank account. A person’s credit history will also appear, especially regarding the regularity of payment of installments.

The banking business makes the customer’s credit score one of the primary considerations in credit approval. So regular credit or credit score payment must be maintained so that it stays in good standing.

How to raise your credit score

If your credit applications are often rejected by financial institutions, it could be because your credit score is not in good shape, so it needs to be repaired. Increasing a credit score can make applying for credit easier:

A. Actively use a credit card

A quick way to boost your credit score is to actively use a credit card. However, use credit cards wisely by using them to shop at merchants that work with credit card-issuing banks or places that offer attractive promotions for credit card users.

B. Be punctual in paying bills

If your credit card is actively being used for transactions, the next thing you should do is pay your credit card bills on time or before they are due. Avoid late payments so you don’t get fined, especially if you’re late on payments because your debt will increase due to your debt burden so your credit score will decrease.

C. Apply for credit at the right time

Apply for credit or loans at the right time or when your debt does not exceed 30% of your monthly income.

Try to pay off or pay off previous debt repayments so that the debt portion decreases. After your financial standing improves, you can again apply for a loan or credit to a bank.

If you have a debt-to-GDP ratio above 30%, the bank will assume you are a risky customer. Therefore, focus on paying off existing debts before applying for new debt.

D. Avoid creating a new credit card

To boost your credit score, you can do this by not making a new credit card. The maximum number of credit cards held to stay in the healthy category is a maximum of 4 credit cards. Therefore, don’t be easily tempted by credit card application promotions offered by bank sales or marketing, which are usually done over the phone.

In addition, the use of credit cards must also be controlled so that the percentage of credit card use does not exceed 30% of the existing credit limit because it will make it difficult to apply for the next credit if the credit score record in BI The control is not good.

Improve your BI audit records

If the credit score is bad, the records in BI Checking or OJK’s SLIK system are also bad. Therefore, your credit history records at BI and OJK must be serviced by:

1. Pay off credit installments or past due debts immediately because you apply for credit at any bank, so you will definitely not get approved if your credit score or quality of record is still poor.

2. After paying the credit or debit installment arrears, check your BI Checking. Pay attention to whether your credit score has gradually changed. If there are no changes, file a claim with the bank where you took the credit.

3. Next, ask for a letter of explanation or clarification from the bank from which you applied for credit, then confirm to the OJK that you have completed your credit obligations. Then wait until BI Checking is declared completely clean.

BI Checking must be kept in the current category so as not to be blacklisted BI to apply for credit. How to Maintain Good BI Auditing can be done with the following steps:

1. Understand existing and current credit
2. Don’t wait for the due date to pay the installments
3. Limit your use of credit cards wisely and do not exceed your credit limits
4. Avoid paying a credit card with a minimum payment
5. Keep evidence of transactions for use in monitoring credit reports
6. Take credit based on need and ability to pay

Maintaining or improving credit scores takes effort and discipline, especially paying your bills on time.

Maintaining a good credit score will obviously go a long way towards the convenience of applying for your next loan. The most important thing is to use financial relief wisely in the form of credit cards or other credit loans so that you are not overburdened with accumulated debt.

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