Credit Term
DSR
Debt Service Ratio
The share of your monthly income that already goes to debt repayments. Most banks approve new loans only up to a DSR of about 60–70%. It is often the single biggest factor in whether a loan is approved.
DSR is your total monthly debt commitments divided by your income, as a percentage. If you earn RM5,000 a month and RM2,000 already goes to loan and card repayments, your DSR is 40%; adding a new RM1,000 instalment would push it to 60%. Banks use it to check you can afford a new repayment on top of your existing ones, so a high DSR is a common reason a loan is declined even when your credit conduct is clean.
Commitments that count include home and car loans, personal loans, and the minimum payment on your cards — even if you always pay more. Some banks use net income (after EPF and tax) and some allow a higher DSR for higher earners. The way to improve your DSR is to raise income or clear existing debts first; a balance transfer or consolidation that lowers your monthly instalments can also help.
Useful guides & tools
This definition is drafted against primary sources (Bank Negara Malaysia, AKPK and the relevant Acts) and is pending editorial fact-check. If you find an error, tell us and we will correct it with a dated note.