Let’s face it. Living in Singapore is a costly affair. Whether you’re looking to purchase your own home, a car, or simply for other personal expenses, you’ll probably take up a loan at least once in your life.
This is why it’s important to ensure that your credit score is ideal enough for your loan to be approved.
A high credit score indicates that you are a low-risk borrower, which entitles you to reduced interest rates.
There are many ways to build and maintain a high credit score. In this article, we will discuss the basics of credit scoring in Singapore, how to check credit score Singapore and how long to improve credit score in Singapore.
A credit score is a 4 digit number that lenders use to estimate how risky you are as a credit applicant based on your ability to repay your debts.
The lower the credit score, the less likely the individual is to get approved for a loan or line of credit. Similarly, the higher the credit score, the more likely the individual is to get approved for a loan or line of credit.
Credit reports and ratings are issued in Singapore by the Credit Bureau of Singapore and the Experian Credit Bureau.
The Monetary Authority of Singapore (MAS) has allowed the following two credit bureaus to supervise and issue credit reports and credit scores:
Furthermore, a grading system assigns “AA” to people with a strong payment history and “HH” to those with poor payment history.
|Score||Rating||Probability of default|
|1911-2000||AA||0.00% - 0.27%|
|1844-1910||BB||0.27% - 0.67%|
|1825-1843||CC||0.67% - 0.88%|
|1813-1824||DD||0.88% - 1.03%|
|1782-1812||EE||1.03% - 1.58%|
|1755-1781||FF||1.58% - 2.28%|
|1724-1754||GG||2.28% - 3.48%|
|1000-1723||HH||3.48% - 100%|
In Singapore, financial institutions pool consumer credit history data, aggregating that information.
A score approaching 2000 indicates to banks and financial institutions that you are likely to be capable of repaying debts on time. In contrast, credit ratings below 1000 imply a significant likelihood of late loan payments or unpaid debt.
You must request a Singapore CBS report to examine your creditworthiness. You may choose between
Price: $6.42 (inclusive of GST). You can opt to pay via VISA, MasterCard or eNETS.
For an additional administrative fee of $17.12, you can pick up your report within 2 hours at any SingPost location.
You can get a free credit bureau report if you apply for a new credit card or loan facility with any CBS member. The supplier will send you a message informing you whether or not your application was accepted. In either case, the letter will include directions on obtaining a free credit report from CBS within 30 days.
Many factors will affect your creditworthiness, including:
This is an important factor in your creditworthiness. Lenders need to see that you have a track record of making on-time payments and they will use your payment history to calculate your creditworthiness.
Your credit score will suffer in case you have a history of late payments. However, in case you have a history of making on-time payments, your credit score will improve.
Credit exposure is the amount of your available credit. It includes revolving credit, such as credit cards, and instalment credit, such as auto loans. A high credit exposure may indicate to lenders that you’re a riskier borrower, which could lead to a lower credit score.
The longer you’ve been using credit, the better. A long credit history shows lenders that you’re a responsible borrower with a track record of making on-time payments.
A high utilisation pattern can hurt your score because it signals lenders that you’re more likely to default on your loan. Utilising your credit wisely will help you maintain a high credit score and keep access to the best rates and terms on loans.
Delinquency is a debt that is past due by more than 30 days. If you have any delinquent accounts, they will be reflected on your credit report and can harm your credit rating
Too many hard inquiries signal lenders that you are in financial distress and may increase the risk of defaulting on a loan. As a result, it is important to be mindful of how often you apply for new credit.
Since credit reports contain information about your credit history going back a year, you can still raise your credit score by implementing the following habits over the next 12 months.
There are many benefits of having a high credit score.
A high credit score will improve your chances of getting approved for a rental property. Landlords frequently investigate potential tenants’ credit scores to gauge their financial responsibility.
Banks and other financial institutions usually check applicants’ credit scores before approving. A high credit score makes you more likely to get a loan faster.
Those with good credit scores often get lower interest rates on loans and credit cards. Lenders see them as a lower risk and are more likely to approve their applications.
Good credit scores can also help you borrow a larger amount of money. Lenders are more confident in lending money to someone with a high credit score, as they are less likely to default on the loan.
Not only will you be able to borrow a larger amount of money with a high credit score, but you’ll also have to pay lower monthly instalments. Lenders offer lower interest rates to those with good credit scores.
A poor credit score can significantly impact your ability to secure a loan. Many lenders use credit scores as one of the primary factors in determining whether to approve a loan application. A low credit score may indicate to a lender that you are a high-risk borrower, which could lead to your loan application being denied.
Additionally, even if you are approved for a loan with a poor credit score, you could be offered less favourable terms, such as a higher interest rate. As a result, it is important to improve your credit score before applying for a loan.
These are key things to remember when building and maintaining a good Singapore credit score. Of course, having a high credit score doesn’t happen overnight; it takes time, effort, and discipline.
If you find yourself requiring a personal loan while still building up your credit score, fret not. At Money Kinetics, we offer an array of customised personal loans to suit your needs. While you take time to improve your credit score, we can provide you with the financial help you need, every step of the way.
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