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How To Improve Credit Score Quickly At The Credit Bureau In Singapore
July 15, 2022
Did you know that a good credit score is essential to you? It helps you get approval for your loans and mortgages, and also for lower interest rates. The majority of Singaporeans will need to take a home loan. Your credit score determines the outcome and the final interest rate of your home loan.
Credit scores can be changed. If you have never taken a loan, it does not mean that your credit score is perfect. It means that your credit score is unknown. Without a borrowing history, Credit Bureau Singapore cannot determine your lending risk.
Let Credit Thirty3, one of the best financial institutions in Singapore, share more about credit scores.
What Is a Credit Score In Singapore?
A credit score is a statistic calculated from a person’s credit history, utilizing data from a variety of sources,
- a loan application
- a credit agency report
- performance on current loans
The score evaluates an applicant’s likelihood of repaying a loan that has been provided to them.
The score is often a range of values, such as 0 to 1000, where each individual who score at the lower end of the range are more likely to miss a payment or default, while those who score at the higher end of the range are less likely to miss a payment or default.
How Do I Check My Credit Score In Singapore?
Before applying for a loan, you must always check your credit score in Singapore. There are various ways to check your credit score in Singapore. They include;
Get Your Credit Report For Free
You can request a copy of your Credit Report from the Credit Bureau or use one of the many online tools that offer free credit scores. To get your Credit Report, you must provide personal information, such as your NRIC number, date of birth, and contact details.
Find out how much you can borrow here.
Buy Your Credit Score
The credit report from the Singapore Credit Bureau cost S$6.42 (incl. GST) + S$2.00 for multiple delivery modes. For an extra administrative cost of S$17.12, you may pick up your report within 2 hours at any SingPost location.
If you find out that you have a bad credit score, you can take certain measures to improve your credit score. While improving your credit score might take some time, it will be worth it in the long run.
Is My Credit Score Good or Bad?
A good or bad credit score differs based on the risk diversity of the money lender. Credit scores range from 1000 to 2000. Both banks and licensed moneylenders in Singapore rely on your credit score to determine your loan approval. Running a financial business, they will take a look at the risk level for loans.
If you have a good credit score of 2000, they will deem you as a low-risk borrower and offer you better interest rates or a larger loan amount.
If you have a bad credit score of 1750, they will deem you as a high-risk borrower. You will then need to find a lender that is willing to offer bad credit personal loans.
How Does My Credit Score Affect My Loan Eligibility?
Your credit score affects your loan eligibility in a few ways. Firstly, it is one of the factors that lenders will look at when considering your loan application. A lower credit score may indicate to the lender that you are a higher-risk borrower, and they may be less likely to approve your loan.
Secondly, even if you are approved for a loan, having a low credit score could result in a higher interest rate because lenders view borrowers with lower credit scores as more likely to default on their loans. They charge these borrowers a higher interest rate to offset the risk.
What Affects My Credit Score?
How can you improve your credit score in Singapore? Some factors may affect your credit score, including;
1. Credit Utilization
Credit utilization is another important factor in determining your credit score. It is the amount of debt you have compared to your credit limit. For example, if you have a credit card with a $5,000 limit and a balance of $2,500, your credit utilization would be 50%.
Your credit score is determined by the use of your credit, unlike other countries which uses the FICO Score.
Study loans or home loans are considered good debts.
Length of Credit History
As mentioned in the earlier part of this article, not having taken any loan does not guarantee you a perfect credit score. Length of credit history also determines your credit score because lenders like to see a long history of on-time payments. The longer your record, the better.
Most lenders look at your credit mix when determining your credit score. It refers to the types of debt you have, such as revolving (e.g., credit cards) or installment (e.g., student loans). Having a mix of both is generally better than just having one.
New Credit Applications
Banks and licensed moneylenders will often check for your new credit applications. Have you recently applied for a loan? Did you sign up for a new credit card? These are the changes that they will look at. When you apply for new credit, lenders will make a hard inquiry on your credit report.
How Do I Improve My Credit Score or Maintain It?
If you have a bad credit score, there are two options for you. You can choose to apply for a bad credit loan that is designed for you, or improve your credit score with the following steps. There are various tips on how to improve your credit score in Singapore. They include;
1. Pay Your Debts On Time
It’s important to always pay your debts on time, whether it’s a credit card bill, utility bill, or student loan payment.
If you have trouble remembering to make your payments on time, you can set up automatic payments with your lender so that you won’t have to worry about forgetting an amount and damaging your credit score.
2. Avoid Multiple Loan Enquiries In A Short Period
When you apply for a loan, the lender will make a hard inquiry on your credit report, which could temporarily lower your credit score. Therefore, it’s best to avoid applying for multiple loans in a short time.
If you need to apply for multiple loans, space out your applications, so they are not all done within a few months.
3. Maintain a Good Credit History
It’s essential to keep your oldest credit accounts open even if you don’t use them often. Additionally, using your credit card regularly (but not maxing it out) can also help improve your credit history and, in turn, your credit score.
4. Limit Your Number of Open Credit Facilities
While opening multiple credit cards or lines of credit may be tempting, it can backfire and hurt your credit score because having too many open lines of credit can make you appear to be a higher risk to lenders.
So, if you have multiple credit cards, try to close some of them down. Ideally, you should only have one or two open lines of credit.
5. Avoid Opening Unnecessary Credit Accounts
You may be tempted to open a new credit card when you see a tremendous sign-up bonus but resist the urge. Credit cards often tempt you with a free gift such as the latest Secretlab chair or a new set of AirPods. Opening too many recent credit accounts in a short period can hurt your credit score. So, only open a new credit card if you need it.
6. Never Default On Your Loans
If you default on your loans, it will damage your credit score and make it harder for you to get approved for new loans in the future. So, if you are struggling to make your loan payments, reach out to your lender and see if they can work with you to create a more affordable payment plan. Most lenders are willing to negotiate and discuss with you. They do want to help you get through your difficulties.
Frequently Asked Questions (FAQ)
How Often Should I Track My Credit Score?
Credit scores can change daily, so it is unnecessary to check them obsessively.
However, it’s a to learn how to check your credit score and monitor it at least once a month so that you can catch any potential errors and correct them quickly. Or, you can check on them when you’re planning to apply for a loan.
What Is the Highest Credit Score?
The highest possible credit score is 2000. However, very few people have a perfect credit score.
Will My Credit Score Improve If I Close My Unused Credit Cards?
Yes, closing unused credit cards can help improve your credit score because it will lower your overall credit utilization ratio.
Whichever is your choice, always remember to choose practices that are helpful to your credit scores. Avoid unnecessary credit cards and always repay your bills on time.
Improving your credit score is achievable with effort and patience. Keep in mind the tips mentioned in this blog post.
At Credit Thirty3, we offer competitive loan packages to help your customers become better financially.