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6 Tips to Improve Your Credit Score in Singapore

A credit score is a measure of your credit behavior, predicting the likelihood of you paying back loans on time based on information from your credit reports.

In Singapore, credit scores are determined by algorithms that track credit usage. Credit scores are ranked according to the following risk grades: AA is the highest, while BB or CC indicate late repayments or delinquency, and DD or lower indicate defaults. The credit score risk grades are as shown below.

Image Credits: valuechampion.sg

You can easily obtain a credit report from the Credit Bureau of Singapore’s website (CBS) for S$8.00 with prevailing GST. Alternatively, you can get it for free by applying for a new credit card or a loan facility.

Before we dive into ways to improve your credit score and manage your debt, it’s important to understand the significance of having a good credit score. A good credit score in Singapore can provide you with access to larger loans and better interest rates. You see, your credit score is a key factor in determining your loan eligibility for purchases like a flat or a car.

In addition to facilitating loan approvals, a good credit score can also have a significant impact on your career in finance. The Monetary Authority of Singapore (MAS) considers credit checks to be essential for employees and potential hires in financial institutions. Low credit scores can lead to job rejections in the finance industry.

Now, let’s focus on how to improve your credit score. As mentioned above, a good credit score can help you to elevate your career in finance and to boost your eligibility for larger loans. In a place where the cost of living is relatively high, it’s necessary for you to manage your debts and maintain a good credit score to be financially stable. Here are some tips to help you manage your debt and improve your credit score:

#1: MANAGE YOUR DEBT

Be organized. Make a list of all your debts, including your personal loans, credit card balances, and mortgages. Keep track of the interest rates, due dates for each debt, and the minimum payments.

#2: PRIORITIZE HIGH-INTEREST DEBT

Focus on paying off high-interest debt first, such as credit card debt. Prioritizing debt can affect how quickly you can become debt-free. Focusing on high-interest debt will save you more money and allow you to redirect your funds to other financial goals, while following the timeline you set.

#3: AVOID LATE PAYMENTS

Can you imagine how continuously paying for late fees can affect your motivation levels to pay off your debt? By the time you receive your third delinquent payment letter, your credit score would already have dropped, regardless of whether the bank waives your late payment fee. Late payments can hurt your credit score, so ensure that you pay your bills on time.

Set up virtual reminders to help you stay on track. Or ask your financial institution how you can set up automatic payments.

#4: KEEP YOUR CREDIT UTILIZATION LOW

Your credit utilization ratio is the amount of credit you’ve used compared to your credit limit. Maintaining low credit utilization can improve your credit score. If possible, try to use no more than 30% of your available credit.

#5: MONITOR YOUR CREDIT REPORT

Check your credit report regularly to ensure that all the information is accurate. Get your credit report from the Credit Bureau of Singapore. If you find any errors, do not be afraid to raise them.

#6: WORK WITH YOUR BANK

Do not avoid calls or letters from your bank, its debt collectors, and lawyers. Hanging up the call can affect your opportunity to find better ways to pay off your debt. Remain cooperative and reachable. If you are cooperative, your bank is more likely to help you restructure your payment schedule.

Image Credits: unsplash.com

In conclusion, managing your debt and improving your credit score in Singapore requires good financial habits and discipline. By following these six tips, you can upgrade your financial situation and achieve your financial goals in a realistic timeline.

Sources:1,2, & 3

Newbie’s Guide To Singapore’s Credit Bureau

The Credit Bureau (Singapore) is a principal credit consumer agency, which has the most comprehensive industry uploads originating from all the major financial institutions and retail banks. Credit Bureau (CB) is a joint venture between the “Infocredit Holdings Pte Ltd.” and “The Association of Banks in Singapore”.

The Monetary Authority of Singapore’s (MAS) vision to improve the public’s risk management capabilities is in lined with the holistic embodiment of CB. How is this so?

The Banking Act allowed the members of CB (e.g., credit card companies) to reveal credit-related data for the strong purpose of analyzing the creditworthiness of existing and potential customers. Simply, CB presents a “complete risk profile” of a particular customer to a particular credit card provider.

This complete risk profile includes a tangible number called the Credit Score. The Credit Score is an independent assessment of an applicant, which guides the decisions of the lenders. It is gauges the likelihood of repayment as well as the probability of going into default. You must pay close attention to your Credit Score if you are planning to apply for any forms of loans or credit. For instance, you and your spouse need good Credit Score to successfully take up an educational loan for your children.

Image Credits: pixabay.com

Say your Credit Score has been in its low point for the past 2 months. Wary not, my friend. You may still rejuvenate your credit history as the reports from the CB manifest your record on promptness over a 12-month period. You read that right! You have the ability to technically “undo” a poor credit history due to late payments and unmet minimum repayment sums. However, paying your monthly credit card bills and loan installments on time must be your top priority for the next 12 months. Doing so will only clean up a section of your credit report known as the “Account Status History”.

Hope fades when your problems go deeper than late repayments. Serious financial situations such as bankruptcy proceedings and debt management programs will remain reflective on your credit report. You have to be careful to secure a pleasant future!

Sources: 1, 2, & 3

How to Improve your Credit Score?

Are you searching for ways to improve your credit score for a better financial future?

You can see the light at the end of the tunnel when you first realise that so much of it depends on numbers. Your credit score is one of those important numbers. It is guaranteed to influence the cost of the big ticket items you have to prepare for such as taking out a mortgage, planning a wedding, qualifying for a car loan and building up for retirement. A good credit score is crucial for these financial successes.

Improving your credit score should be a priority. The higher your score, the better your chances of getting the credit you need. So do you know your credit score? And more importantly, do you know how to improve your credit score if it’s not measuring up?

Here are five tips to help you improve on your credit score.

Check your credit report and rectify any mistakes

Any incorrect information you find on your credit report could be affecting your credit score. Check your report thoroughly and get it fixed if you do see a mistake or factors that have pulled down your score. It is advisable to check at least once a year as the information in your credit report determines your credit score. Take steps to fix it and follow up to ensure it has been resolved. Otherwise, the error will remain on your report and could possibly hurt your credit score.

If you wish to dispute the completeness or accuracy of any item of information such as the account status, previous enquiries and overdue balances, do consult Credit Bureau Singapore (CBS) and CBS will post a notice in your credit file that the credit data is being disputed and is under investigation.

Pay your bills on time, all the time

A missed credit card bill payment will have the greatest and longest lasting impact. The more recent the missed payment occurred, the greater that impact will be, and the more missed payments you have, the longer it will take to recover. The prescription here is clear: Pay your bills on time, all the time.

How you charge purchases to your credit card and pay off your credit card debt every month will determine your credit standing and show how much of a credit risk you are. Paying your credit card balances in full every month helps you to maintain your credit rating and build up a good credit score. This will enable you to use credit to work harder for you, rather than becoming a slave to credit.

Where possible, always try to pay in full as rollover or outstanding balances will be charged at 24% p.a. Consider payment via GIRO to ensure payments are not late. The consistency of paying bills on time is critical to your credit score. It is simply month after month of plain-vanilla, on-time payments. This will greatly help improve your credit score if you are trying to offset the late credit card payments as these on-time payments will make positive behaviour in your favour moving forward.

Note: Default records stay on your credit report for 3 years upon full or negotiated settlement while bankruptcy data is retained for 5 years from the date of discharge from bankruptcy.

Avoid multiple new credit applications within a short period of time

There is no hard and fast rule that determines the number of new credit applications that will push you from looking like a responsible consumer to an unreliable one as every bank has a different set of requirements and criteria to satisfy.

Applying for new credit facilities within a short period of time can have an adverse effect on your credit score as it would put many enquiries against your credit report. Always approach credit use with moderation.

Note: Previous Enquiries are retained on your credit report 2 years from the date of enquiry.

Keep your credit active

One of the main purposes of having a good credit score is to ascertain that you are a responsible user of credit. It may seem contradictory, but it is not good enough to simply pay off your credit card bills and not utilise them again. There’s a solution, but one that should not be treated irresponsibly. Use your cards from time to time, manage within your credit limits and generate a sustained history of on-time repayments. Keep your credit active. In today’s world of credit repair, part of proving you’re a good credit consumer is actually using your credit.

Commit to keeping it simple

The bottom line when it comes to credit is this: When you do pay your bills on time, all the time, keep your balances low, avoid multiple new credit applications within a short period of time and keep your credit active, your credit score will work out fine. Many of us tend to overthink credit, but it is that simple. It is all about prioritising what’s important to you.

The absolute best thing you can do for your credit is to commit to doing the following in the long term:

Check your credit report annually
Pay your bills on time, all the time.
Avoid multiple new credit applications within a short period of time
Keep your credit active

Not everyone may have a sterling credit record but the good news is, it is entirely within your power and control to rebuild your credit health. You also have to be consistent. The above factors all matter, and credit is not something that grows by leaps and bounds, but if you treat it right, it will not fail you but push your score in the right direction.

Lost? Here Are Sensible Money Tips From 3 Financial Experts

Tangled in a financial dilemma? Who will you ask for monetary advice or practical financial tips? If a professional is out of your reach, the next best thing is to read about their nuggets of wisdom.

This is why I collated the best financial advice from three experts. These experts are no other than Suze Orman, Cullen Roche, and Jeanne Kelly. Suze Orman is an American Financial Advisor, Author, Motivational Speaker, and Presenter. Cullen Roche is the Founder of a financial services firm called Orcam Financial Group, LLC. Lastly, Jeanne Kelly is a media acclaimed Credit Coach.

1. TAKE CHANCES

Suze Orman tells us that nobody achieved financial security by being frightened and weak. Being confident in one part of your life is contagious, as it will bring more opportunities to you. You won’t get there unless you try!

2. INVEST MORE IN YOU

Cullen Roche shares that the primary way to financial success is more than just saving. It is by investing more…in you. Since your primary source of income is the person you see in the mirror, a good way to maximize your wealth is to make yourself valuable to other people or other companies.

To be valuable and different from the rest, you must never stop learning. Education that improves your skills so you can adapt to the ever-changing economy. I personally recommend you to start with free Internet education from YouTube’s Khan Academy or Crash Course.

3. BAD CREDIT IS EASY TO AVOID

Jeanne Kelly claims that it is easier to maintain good credit by avoiding bad ones than to rebuild a new credit once it has been declined. She says that a quick way to avoid bad credit is by regularly reviewing the credit reports – at least two times a year. In merely 15 minutes, you can minimize the errors of your credit report and save more money!

4. EQUATION FOR YOUR INCOME

Lastly, Cullen Roche suggests for you to try the 50/30/20 budgeting rule. Spend 50% of your income to the basics or essentials such as rent, food, and utilities. 30% should go on your personal needs such as entertainment, vacation, and leisure. And the 20% left should be allocated to your savings.

Image Credits: 401(K) 2012 via Flickr with CC Attribution-ShareAlike License

Take in their knowledge only if it applies to your situation. Then, fuse the elements together and enrich your life.

Sources: 1 & 2

Smartest and Dumbest Ways to Use Credit Cards

Here’s the truth: whether you like it or not, we are living a life that has been accustomed to using credit cards. They seem to be rampant everywhere. There are even some places that only take payments via credit or debit cards. And it is also a given fact that most of us have at least one credit card in our wallets.

But take note that accessing credit cards is not a right but a privilege. If you make mistakes, you might just end up in a sea of debt that you’ll find very hard to clear.

With the advent of credit cards comes the dumbest and smartest ways to use it. Here’s a quick list of the dumbest moves that will surely leave you with a lot of credit debt.

Making late payments

Never mistake a due date as a guideline. It is your responsibility to execute timely payments for your credit use. Remember that although there are rules that must be followed, credit card issuers remain to have the right to raise rates when it comes to late payments. When you pay late, the following will apply to you:

You will be obliged to pay a late fee, and
Higher interest rates may apply to your future purchases. In some cases there may be an interest rate adjustment, but this is not an absolute fact.

Paying minimum for your credit card use

If you are paying the minimum in your credit debt now and then, it’s not actually a big deal, but it won’t be good at all anymore if you make it a habit. Paying only the minimum can dramatically increase your credit debt.

Abusing credit card cash advances

While there may be emergencies where your only option is to take cash advances, always remember that it is not a cheap deal. In general, licensed moneylenders can be a quick fix for your financial needs but it can incur up to 48% interest per annum. You can consider a personal loan before considering cash advance. There are several free personal loan calculators that can help you assess which will help you save more.

If there are dumb ways to use your credit cards, there are also considerably smart ways to utilise them. Credit cards offer valuable rewards when utilised properly. Here are the smartest ways you can utilise your credit card.

Earn credit rewards for spending

When you use rewards credit cards, it can earn valuable points, air miles and even cashback for up to 6% of your purchases. This might be a meager amount but some card holders earn a few hundred dollars with cashback rewards on a yearly basis. The best cashback credit cards in Singapore are usually just within reach.

Credit cards as a payment method

Paying your credit card statements within the grace period will help you avoid credit charges. When your credit cards are used as a payment method, it will allow you to enjoy a handful of benefits at no cost to you.

As your protection from devious merchants

When the merchant fails to deliver the services or items you have purchased, you can get help from your credit card provider during this dispute. If your credit card provider can verify your claim and block your payment, you just might be able to get your money back. However, keep in mind that this is only applicable with certain products. Always check the terms and conditions before applying for a credit card.

As a way to build your credit

Building your credit score is the best way you can do to qualify for the most affordable rates when doing big purchases. Observing how your credit card score affects your chances of getting a loan approval. If your credit score is bad, you don’t get approval on a loan. At most you will get a higher loan quantum with a good credit score. The best way still to improve your credit score is to get a personal instalment loan and pay it back consistently.

(This article is brought to you by SingSaver.)

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