Have you ever been told that your loan application is rejected because you have a low credit score on CTOS?
You might then find yourself wondering, “what right does CTOS have, to give me a credit score and publish it without my permission”?
CTOS is a credit reporting agency that collates credit reports from various sources including the Central Bank and other agencies for the purpose of disseminating that information to its fee-paying subscribers. The conduct of CTOS’ business is governed by the Credit Reporting Agencies Act 2010 (Act) which sets out among others, the scope of CTOS’ duties.
Understandably, some have taken issue with CTOS disseminating information of credit scores without their consent. Such was the case in Suriati bt Mohd Yusof v CTOS Data Systems Sdn Bhd [2024] MLJU 437, where the Plaintiff filed a court action against CTOS, alleging among others that her creditworthiness had been affected when CTOS gave her a low credit score, resulting in her not being able to obtain a loan from the banks.
When the case was heard at the High Court, the High Court held that the Act only empowers credit reporting agencies to store credit information for their subscribers’ access but does not empower credit reporting agencies to formulate a credit score. In other words, the credit reporting agency cannot analyse financial data / record of a person and come to a conclusion as to the creditworthiness of that person.
However, the Plaintiff’s vindication was short-lived. On appeal1, the Court of Appeal observed that under Section 2 of the Act, “credit report” includes credit information that has any bearing on a customer’s eligibility to be provided with any credit. The court held that some credit reporting agencies would report by way of a credit score and this did not necessarily run afoul of the Act. In this case, the credit score was calculated by a software using algorithms without human intervention. The Court of Appeal went on to reverse the High Court’s earlier decision.
This finding by the Court of Appeal is significant because it acknowledges that credit reporting agencies may analyse financial data / record of a person and give a credit score to an individual/company in its credit report, if they choose to do so.
Thus, to answer the question above, CTOS does have a legal right to give you a credit score in its credit report and publish it – with or without your consent. As your credit score may have an effect on your loan applications, you may want to always keep it in the clear.
About the Author
Poon Wei Ying is a Senior Associate of XK Law who graduated with First Class Honours from the Cardiff University, United Kingdom. She believes in giving back to the society and that education can change a person’s life.
