A good credit score provides a vast range of benefits — from being eligible for higher loan quantums to loans with lower interest rates and having easier loan approval process.
Singaporean banks and other financial institutions are more keen to extend loans to you if you have an excellent credit score. They examine the plausibility of your financial habits before extending the loans.
A credit score is a predictive rating that estimate your financial ability to repay loans. If you have a bad credit score, it’s difficult for you to apply for credit cards or any loans such as property mortgage or car loan.
So, if you’re planning to apply for any type of loan, it’s time to fix, obtain and maintain a good credit score.
What is a Credit Score?
Presented as a four-digit number, it is based on an analysis report of a person’s past loan accounts history that ranges between 1000 to 2000. A credit score represents the financial creditworthiness of a person.
If the credit score is near to 1000, it shows a higher risk of default in payment. If it’s nearer to 2000, it means your financial health is excellent and demonstrates better credit risk.
It is still best to have a good credit score even if you don’t plan on applying for loans in the long run.
When unexpected issues arise that require a large sum of cash, you won’t have a problem getting approval from banks or financial institutions for loans.
How to check credit score?
You can find out your credit score by requesting an online report from Credit Bureau Singapore (CBS) at the cost of $6.42 (inclusive of GST).
Once ready, you can collect at SingPost Branches Islandwide, CrimsonLogic Service Bureau or Credit Bureau’s office at Shenton Way.
Now that you know how to obtain your credit score, here’s how the scoring system works in Singapore.
How does the Scoring System Functions in Singapore?
MAS, also known as The Monetary Authority of Singapore, has authorised two credit bureaus — Experian, formerly known as DP Credit Bureau and Credit Bureau of Singapore — to publish credit scores and reports.
Your credit score will be measured by a proprietary algorithm that traces your credit history.
They will check your financial history and produce a report comprising details of past loans, payment history, types of credit you applied, new credit, length of credit history, and even the number of types of inquiries you have queried from lenders.
Based on these factors, they will issue a credit score.
How to Improve Credit Score?
If your credit score has been in dire straits because of late repayments and now, you’re looking to improve — read on.
There is no precise formula to predict how long it takes your credit score to improve.
Your credit score calculation is based on a 12-month rolling basis of your account repayment history. But with discipline and patience, your credit score will gradually improve.
In other words, you can erase your bad credit history by making it a priority to pay all your dues on time in the next 12 months.
Let’s take a look at these tips and tricks to up your credit score to a good number.
How to Obtain a Good Credit Score in Singapore
Pay Credit Card Bills on Time
If you ever missed a credit card bill payment, it will negatively affect your credit score in the long run.
So the more you avoid paying your credit card bills, the longer your credit score will take to recover.
Thus, it’s important to pay your credit card bills on time. Not only it strengthens your credit score but helps you maintain a good credit rating.
Do note if you delay paying your credit score beyond 30 days, you will be placed in a delinquent category.
This will further affect your credit score even more.
Thus, it’s important to pay your credit card bills on time. Not only it strengthens your credit score but helps you maintain a good credit rating. If you have multiple credit cards’ outstanding payments unpaid and have difficulties trying to pay off all the debts, do consider getting a debt consolidation loan for better management of finances.
Use Credit Cards Carefully
It’s easy to get carried away when you’re using your credit cards to pay for everything. If you are not able to pay the oustanding amount when the bill comes, you end up accumulating debt with high interest rates, which will compound into a large amount if you are not careful.
Try not to use your credit cards as sources of money. It is best to pay off any oustanding amount and not just the minimum amount when you receive monthly credit card statement bills.
Never Default on Loans
If you fail to pay monthly loan instalments, it will significantly affect your credit report.
You will be a defaulter in your credit record. It will also be impossible for you to obtain a line of credit, credit card or loan.
So, avoid being a defaulter! If you can’t make the monthly payments, seek a credit counselling to restructure your debt situation.
Not to mention, defaulting might lead to legal action if you have money but simply refuse to pay.
Short-Term Personal Loan to Repair Ruined Credit Score
If you have a poor credit score, the most straightforward approach to repair a bad credit score is by settling all loans with a single debt consolidation loan.
Banks and other businesses, such as ourselves, offer personal loans to help you build your credit.
After a while, your damaged credit score will be repaired gradually as you’ve paid the loan’s monthly instalments.
If you know your current credit score and it’s around B or under, you can apply for a personal loan before moving to larger loans such as a home or car loan.
This could lead you to a higher AA rating by the time you plan to apply for a larger loan.
We hope that — with the above tips — you can quickly build a good credit score. But it doesn’t stop there; you’ll have to go the extra mile in maintaining a good credit score.
To do so, here’s a few helpful hints that can prevent you from falling into the abyss of a bad credit score.
Avoid Having a Bad Credit Score in the Future
Multiple Accounts in Credit card & Line of Credit
Too many credit cards or line of credits can be dangerous.
Your credit score will take a plunge if your debt is spread across multiple credit card accounts, various lines of credit and personal loans.
You will likely get confused due to the billing cycles and most likely, miss the payment deadlines.
With that said, it is best to avoid this mistake that can seriously take your credit score to its grave!
We hope that — with the above tips — you can quickly build a good credit score.
But it doesn’t stop there; you’ll have to go the extra mile in maintaining a good credit score.
To do so, here’s a few helpful hints that can prevent you from falling into the abyss of a bad credit score.
Late Payments
If you’re going to be late with the payments, it is best to call your bank or financial institution in advance and inform them.
Avoid Applying for Too Many Loans in a Short Time
Your credit score will drop significantly if you apply for multiple forms of loans or credit in a short period.
You will be suspected by banks or financial institutions that your financial situation is in a roughhouse.
Rebuild Your Credit Score for Financial Success
We hope that with this guide, you are no longer at your wits’ end, fretting on how to recover from a bad credit score to a good credit score.
This is a chance for you to come clean and change your financial attitude.
If all else fails, you still have another option — apply for a debt consolidation loan and aim to make monthly payments in full.
This will not only demonstrate your capabilities in paying on time but also show that you’re competent for a prescribed payment manner.
Get in touch with us today, and we will provide a loan that suits your financial needs.
