Credit Score 101 In Singapore
Individuals use credit for a variety of reasons. Some need it to get a car or a home. Others apply for credit to make their dream business come to life. There are also those who need it to bridge their current financial gaps.
Taking out a personal loan is extremely helpful and practical. Unfortunately, not all applications are approved by banks and other financial institutions. Why? It’s because financial institutions have a standard practice to do a credit investigation before lending money.
If you have a bad credit history, you may not be able to qualify for loans and credit cards. Because of this, you need to learn how to get your CBS report, how to do a credit check, and how to improve your credit score in Singapore.
Here at OMY Singapore, you will discover the following:
What Is Credit Score In Singapore?
Before finding out how to increase credit score or how to improve credit score in Singapore, you must first know what credit score is.
A lot of people find it hard to understand what a credit score is and how it works. To help clear things up, we have to backtrack a little and talk about what credit is.
Credit is a form of trust between you and a financial institution. In simple terms, a financial institution trusts you with a certain amount of money and you have agreed to repay the money on time and in full.
Credit score in Singapore indicates the creditworthiness of an individual. Banks and financial institutions use this number as a gauge to tell if you are qualified for a loan, credit card, and other financial products.
For example, if you have a bad credit score, you may struggle to get approved for the credit card you want, or the home mortgage loan you need. If you have a good credit score, however, you will be able to qualify for great interest rates.
In Singapore, when you have a credit score that is close to 1000, it means that your credit history is bad, and you’re at risk of defaulting loans. Take a look at this table below to know more about credit scores in Singapore.
|Risk grade Probability of default
|1911 – 2000
|AA ≤ 0.27%
|1844 – 1910
|BB 0.27% – 0.67%
|1825 – 1843
|CC 0.67% – 0.88%
|1813 – 1824
|BB 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
What Causes Bad Credit Score In Singapore?
What if you got your Singapore credit score online and you have a low score? One of the first steps you must do in learning how to clear your bad credit history in Singapore is to figure out what caused your bad credit score in the first place.
Here are some of the most common causes of bad credit scores in Singapore. Make sure to avoid these if you are serious about learning how to increase your credit score.
New or recent credit
A new credit card, loan, or mortgage application will have an effect on your credit score. But if you pay on time, your score will eventually increase.
If you were involved in bankruptcy, your credit score would take a significant hit. This is because bankruptcy means that you were unable to pay off your debts. Even if you get out of bankruptcy, you need to wait for a long time before it is removed from your credit report.
Frequency of borrowing
You should be careful when you apply for a loan. Applying for too many loans at the same time will hurt your credit rating.
Doing too many loan inquiries also lowers your credit score. If you don’t need to apply for a loan at all, don’t do it.
When you don’t make your monthly payments on time, your credit score will most likely drop because it signifies that you are not capable of taking care of your financial obligations.
Immature credit history
If you’re still a newbie when it comes to taking out loans or using credit cards, expect to have a low credit score. If you’re just starting out, you might want to consider a secured credit card until you have built a decent credit track record (more on this later).
Why Do You Need To Increase Your Credit Score?
You may be wondering, what makes your credit score so important? The answer is quite simple: it will play a really big role in your financial life. A good credit score will help you get approved for loans, and a bad credit score will make it difficult for you to get financial products.
Let’s start with something everyone can relate to.
Imagine that you want to buy a house. You know that to get a mortgage approval, financial institutions check your credit score. If your credit score is not good, you will have to go through a long and tedious application process, only to get rejected in the end.
If your credit score is excellent, on the other hand, you can get the best loan terms and enjoy a lower interest rate. This is why as early as now, you must learn how to improve your credit score in Singapore.
How To Get My CBS Report In Singapore?
The first step you need to take to find out how to improve your credit score in Singapore is to first get your CBS report in Singapore. In this section, we will discuss how to check credit score in Singapore.
You may think getting your credit report in Singapore is hard, but getting your credit bureau report score is actually very straightforward.
If you want to learn how to check your credit score in Singapore, you can just get it online from Credit Bureau Singapore or CBS for S$6.42, inclusive of GST.
You can also get your credit score from any of these offices from Monday to Friday, 9 a.m. to 6 p.m. (closed on Public holidays and weekends):
1. Credit Bureau (Singapore) Office
Way, #20-02 SGX Centre 1, Singapore 068804
+65 6565 6363
2. SingPost Branches Islandwide
3. CrimsonLogic Service Bureau
133 New Bridge Road, #19-01/02 Chinatown Point, Singapore 059413
+65 6538 9507
4. Supreme Court Lane, Level 1,
Supreme Court Building, Singapore 178879
+65 6337 9164
You can also get a free credit report in Singapore by applying for a new credit card/loan facility with any CBS Member. Most lenders in Singapore are affiliated with this bureau.
See the list of licensed Moneylenders in Singapore.
After doing this, you’ll get a notification from your provider about whether or not your application has been rejected or approved. The letter will contain your instructions on getting a credit report from CBS within 30 calendar days.
See? Learning how to check your credit rating isn’t challenging at all! After you do this, you can start learning how to clear credit bureau in Singapore.
How To Improve Credit Score In Singapore
Wondering how you can improve your credit score in Singapore? We’ll discuss some tips below.
Review your credit report
Always ensure that the information on your credit report is correct. Your credit report holds all the details of your credit history, including your repayment history, credit limit, and credit card usage. You should examine your credit report at least once a year. This is to help you spot any errors and clear them with your lenders.
If you see an error on your credit report, contact the credit bureau immediately. They will call your bank about the mistake and let financial institutions know that the information in your report is being disputed.
Always pay your loan on time
If you want to learn how to improve your credit score in Singapore, make it a habit to refer to your financial calendar and pay your monthly credit card payments on time. As much as possible, automate payments to ensure you stay on track with your financial obligations.
Don’t apply for a lot of loans
Applying for too many loans at the same time looks bad on your credit report and will decrease your chances of getting approved for each loan.
Keep your credit utilisation ratio below 30%
Wondering how credit cards affect credit score? The answer lies in your Credit Utilisation Ratio.
Your credit utilisation ratio refers to the percentage of your credit limit that you are using. When it comes to the credit utilisation ratio, a lower number is better. For example, if you have a credit card with a limit of S$3,000 and you use only S$450, your credit utilisation ratio is 15%. This will greatly improve your credit score in Singapore.
Increase your credit limit
This tip is also a really good idea, but you need to make sure you are using this to your advantage.
Lenders will look at your credit limit to determine if you can afford a loan. The higher the credit limit, the more proof you have of your ability to repay. A higher credit limit also means it is easier for you to lower your credit utilisation ratio.
Make larger payments
When learning how to improve credit score in Singapore, this is one of the easiest tips to follow. As much as you can, make larger payments every now and then to your loans. This will not only help you pay off your loan early, but it will also help you pay less interest over time.
A Word From OMY
Learning how to improve your credit score in Singapore is crucial especially if you want to get your finances in order. A good credit score will help you get great interest rates. A bad credit score, on the other hand, can make your financial life miserable, and you’ll have to go through a lot of hoops just to get approved for the loan you need.
Hopefully, we have been able to shed some light on how to check my credit score in Singapore and how to improve your credit score in Singapore. Once you achieve this, you will be able to qualify for the best loan offers.
More from OMY: Best Personal Loan in Singapore (Fast Approval and Low Interest Rates)