A credit score is a number reflecting your likelihood of paying a credit back. In Singapore, banks and credit card companies will be interested in your credit history when calculating the credit score, which they then use to determine your creditworthiness. A person’s credit score also determines helps lenders determine your likelihood of repaying your debt. Each creditor in Singapore has his own range of credit score which they use to rate borrowers probability of repaying their debt back, whether to even offer the borrower the applied for credit hence calculate the risk they will be incurring.
Low Credit Score In Singapore
Find out if you have committed one of the 4 below listed mistakes which might have lowered your credit score in Singapore.
If you have in the recent past applied for a home loan from Singaporean moneylenders and got back an estimated amount which is lower than the sum you expected, your credit score might be responsible for this low estimation.
Your credit score may be one of the key reasons why your credit score has reduced the funding you receive or the high rate of interest you are being charged. By analyzing your credit report you will be able to explain the errors in your credit report or even identify emerging patterns of your credit use.
- Missed Or Late Loan Repayments
When you change your residential address and failed to bring up to date the records, you will not be able to receive a specific bill on time or even not at all. This will mean you end up missing a credit card bill or a utility bill thus ending up settling them after the agreed due date.
Although you may have well-meant intentions, sometimes the daily life stress takes a toll on you or you may perhaps receive a billing alert on your email or phone but you end up forgetting to pay.
Both late repayments and missed payments often than not affect your credits scores very negatively. In maintaining your basic records updated and ensuring you do not postpone essential credit repayments can help greatly to ensure you avoid this mistake. Making on-time payments will also help make a noticeable difference in your credit score.
- Exhausting Your Credit Card Limit
When you end up maxing out one or more of your credit cards with cash advances and on purchases, you unintentionally send the wrong message to your potential Singaporean lenders. This to lenders shows as a sign that you are too deep in debt and that you are not able to efficiently handle your credit. By upping your credit line, you will be able to access loans and even then ensure you do not spend all these amounts as it will lower your score thus affecting your credit history.
In 2014, Singaporeans owned around 9.7 million credit cards both main and supplementary and the figure has since kept growing. This means as a Singaporean you will most likely end up having more than one credit card, therefore it is recommended to spread your borrowing rate across the different cards instead of borrowing against one card only.
Ensure you also avoid taking large amounts of credit within a very short period of time. This to potential lenders always indicates you are constantly in financial problems, even when you are well capable of making repayments on time.
- Focusing On A Particular Payment Alone
You may have accumulated a large amount of debt and you intend to be rid of it sooner than later. There are several options available for you to repay the debt, from paying off the smaller debts first to handling the biggest loans head on.
While you are in the process of clearing your outstanding debt, you may end up forgetting or even overlooking a particular credit card debt. This will easily account for a low credit score. To avoid making this mistake, ensure you pay the minimum amount due on all the sources of your credit. Also keeping a reminder ahead of the agreed-upon repayment date and making sure you act upon it, will ensure you do not overlook or even miss a particular credit repayment.
When you can pay off all the smaller loans ensuring you have less credit to repay therefore you will not have many credit cards loans and advances to keep overwhelming you by both having to remember which bank you owe and how much needs to be paid within a given date.
- Family Cards Or Being A Loan Guarantor
Most people have a helpful nature and when a friend or relative is in financial trouble, you may want to bail them out. This can be anything from providing them with a supplementary credit card to acting as a guarantor for loans, they may be applying for.
In Singapore, this type of debt does not affect your credit score in any way. But their delinquency and missed repayments on their part may force you to end up footing their bill and at the same time, you will badly hit your credit score. Ensure you are careful and certain the person you act as a guarantor can faithfully repay their loans.
A more suitable option would be to loan them some of the money they need that they are able to repay back on the pre-decided conditions and terms.
These little things will slowly add up over a long period of time and one day when you least expect, they end up hitting your credit score really badly.
If your credit score in Singapore has fluctuated in the past, in analyzing your credit score history you may be able to identify another reason for your lowered credit score, besides the ones mentions above. Important is to remember that your credit score number can save or cost you a lot of money. It is however up to you to ensure it remains strong so that you can access more opportunities to borrow when the need arises.