How To Improve Your Credit Score Quickly In Singapore

 

Sometimes in life, you may need money to cater for an emergency, make a large purchase or consolidate your debts.

This may force you to take a loan to help you tide over the situation. However, did you know that your creditworthiness greatly improves your ability to get a loan?

In this article, we will discuss what a credit score is, how it affects your loan eligibility, and how to improve or maintain it.

What Is A Credit Score In Singapore?

Credit scores are like a report card on your financial history. They’re an important part of getting loans, mortgages or other types of loans that require collateral.

A credit score is based primarily on information on your credit report extracted from several sources. Some of these include:

  • Credit bureau report
  • Existing loan’s performance
  • Loan applications

A credit score is essential because it is one factor that lenders use to determine whether to give you a loan and the amount of interest to charge.

Low-risk borrowers are characterised by a high credit score, which results in lower interest rates on their loans and allows them more freedom in spending without fear of being late with their payments.

A low credit score could lead to a higher interest rate on a loan because the lender considers you a higher-risk borrower. In general, the higher your credit score, the better.

How Do You Check Your Credit Score In Singapore?

It is essential to how to check your credit score because it is one of the factors that lenders look at when considering whether to approve your loan.

To get your credit score, you first need to get your credit report. The report includes your credit score and information about your credit history.

Ways Of Getting Your Credit Report

There are two ways of getting your credit report in Singapore. There is the free way and the paid option. You can choose the one that best suits you.

The Free Option

In Apr 2016, Singapore’s three major credit bureaus (Experian, TransUnion, and Equifax) started providing free credit reports to Singaporeans.

This is part of Credit Bureau Singapore’s (CBS) scheme to help people better understand and manage their finances.

To get your free credit report, you will need to provide personal details such as your name, NRIC, and contact details. You will also need to answer a few questions about your financial history.

Once you have submitted the form, you can view your credit report online.

The Paid Option

You can also get your credit report using the paid option. This is the most common way of getting a credit report in Singapore.

You only need to send an online request from CBS to get your credit report.

It will only cost you about $6.42. The various payment methods include:

  • Credit card
  • Mastercard
  • Visa

How To Tell If Your Credit Score Good or Bad

When it comes to credit scores, there is a lot of confusion and misinformation out there.

So what is a good credit score? And more importantly, how do you know if your credit score is good or bad?

The credit score ranges from 1,000 to 2,000, with 1,000 being the lowest and 2,000 being the highest.

A score of 2,000 or any number close to it is a good credit score, while a score between 1,000 and 1,723 is a bad credit score.

This means you are likely to face difficulty in getting approved for loans and lines of credit.

How Does Your Credit Score Affect Your Loan Eligibility?

The higher your credit score, the more likely you will be approved for a loan and get a lower interest rate. You are likely to pay a higher interest rate if you have a low credit score.

Your credit score is one factor that lenders look at when considering your loan application. Other factors include:

  • Income: Lenders want to see that you have a steady income that is sufficient to repay the loan.
  • Employment history: Lenders want to know whether you have a stable employment history so they can feel confident that you will be able to repay the loan.
  • Bankruptcy: If you filed for bankruptcy in the past, it is likely to impact your ability to get a loan. Many lenders will not grant a loan to someone who has filed for bankruptcy within the past few years.

What Affects Your Credit Score?

Several things can affect your credit score. Some of these are within your control, while others are not. These are:

Credit Available

This is the number of open, active accounts available for credit use. Opening up more accounts within a short period can lower your credit score.

Frequency Of Credit Applications

The credit score also takes into consideration how recently you’ve used each line of credit. When you want to apply for new credit, it is better to space out your applications.

This is because if you apply for many credit facilities within a short period, lenders may interpret this as a sign that you are desperate for credit or that you have exhausted your finances.

Your Enquiry Activity

Whenever you or a lender looks at your credit report, it is always recorded as an enquiry.

Having too many enquiries within a short period can lower your score because it seems as if you’re trying to access too much credit at once, which multiplies your debt.

Hence, it would be best if you reduce the number of times you apply for credit.

Pattern Of Utilisation

This is the percentage of credit you’re using compared to the total credit available.

It’s better to keep this number low because it shows lenders that you’re not maxing out your credit cards and can control your spending.

Data Of Account Delinquency

This refers to whether you’ve made any late payments or missed any payments on your accounts.

It’s crucial to keep up with your payments because late or missed payments can negatively impact your credit score significantly.

History Of Credit Account

Having a history of payments made in full and on time will help improve your credit score.

How Do You Improve And Maintain Your Credit Score?

Now that you know what affects your credit score, you might be wondering how to improve your it.

Although improving your credit score is not as difficult as it may seem, it requires some work and discipline. Here are some valuable tips on how to improve your credit score:

  • Pay your debts on time: This is the most crucial factor in determining your credit score.
  • Make sure you pay all your debts on time: This includes credit card bills, student loans, car payments, etc. Even one late payment can negatively impact your credit score.
  • Opt for debt consolidation: This effective way of improving your credit score involves taking out a new loan to pay off your outstanding debts. This way, you will have only one loan to worry about. Making timely payments will help improve your credit score.
  • Make one-time bill payments: In addition to paying your debts on time, you should also do the same to your bills. This includes utility bills, phone bills, etc. Late payments on these bills can also negatively impact your credit score.

Conclusion

It’s no secret that a good credit score goes a long way in Singapore.

A strong credit score can help you get approved for loans and credit cards, and lower interest rates.

Take note of the various ways to improve your credit score, make a plan, and take action today to improve your credit score quickly and increase your chances of getting a personal loan.

But if you need a loan now, apply now with Katong Credit.

 

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