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

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5 Things to Consider Before Getting a Personal Loan

Personal loan is one of the most sought-after loans in Singapore. With a personal loan, you can borrow funds from a financial institution and pay them back in fixed instalments over an agreed period. However, you typically need to meet a minimum income requirement and to pass a background check on your credit history.

Generally, it is much cheaper to get a personal loan rather than borrowing money from a moneylender. Moreover, you will need to submit a lesser number of documents compared to other types of loans such as car or home loans. These factors contribute to the popularity of personal loans.

Apart from these, consider the following points before getting a personal loan.

#1: PERSONAL LOAN HAS A MINIMUM INCOME REQUIREMENT

The eligibility for personal loan incorporates your income and your age. You need to pass the minimum income requirement (e.g., S$30,000 per annum) and the age requirement (i.e., usually under 60 years old). These strict requirements ensure that you will be capable of paying off the loans and that you will be paying on time.

#2: PERSONAL LOAN IS NOT FOR EVERYONE

Now that you know the basics of personal loans, you must remember that it is not for everyone. You need to contemplate the purpose of the loan before getting one. Compute for the monthly fees and other charges.

You see, it is better to use your extra funds if you intend to use the loan for lifestyle desires. Lifestyle desires include purchasing a new gadget or booking an international cruise. On the other hand, you need to carefully assess your business plan and financial situation if you intend to use the money for business and investment.

#3: PERSONAL LOANS CAN MAKE OR BREAK YOUR CREDIT STANDING

Examine your credit standing as it affects your personal loan application. Paying your dues on time is one way to keep your credit score on the good side. In contrast, accumulated monthly charges and overdue payments add red flags to your credit score. As a new applicant, carefully consider the terms and conditions of the bank.

#4: PERSONAL LOANS COME WITH SERVICE FEES AND OTHER CHARGES

Do not be fooled by the attractive loan prices flashed by the banks and financial institutions. You can end up paying more money due to service fees and other charges. You will pay the monthly fees along with the effective interest rates. If you plan to pay by cheques, returned checks can also be charged. Thus, new applicants must consider other forms of payment such as mobile banking.

#5: PERSONAL LOANS SHOULD BE YOUR LAST RESORT

Building an emergency fund is a part of the fundamentals of being financially savvy. When an unfortunate event takes a toll on your finances, you still have reserves. If your emergency funds have depleted, personal loans should be your last resort.

Avoid spending your personal loan to impress other people with your new gadget or with a grand getaway. Spend your extra funds on your lifestyle desires instead of borrowing money.

Personal loans have a variety of advantages and disadvantages. We hope that you can manage your finances well if you decide to avail yourself of a personal loan in the future.

Sources: 1 & 2

 

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8 questions to ask yourself before getting a personal loan

a man stressed over bills

Are you in need of quick cash for an emergency? One of the most important factors when considering applying for a personal loan is the interest rate.

Whether you’re planning to go for the Standard Chartered CashOne Personal Loan (as low as 3.48% p.a.) or CIMB CashLite (3.5% p.a.), pause for a moment to think it through.

Ask yourself these questions before getting a personal loan.

#1: Why do you need the money?

There are many reasons you may wish to borrow money. Maybe you’re faced with medical bills or unexpected home renovations.

For those looking to pay off high-interest debt, applying for a personal loan would make sense too. For example, if you have a credit card debt at a 25% interest rate per year, it would be wise to take up a personal loan with a 7% interest rate to consolidate your debts and pay it off first.

Go ahead and get that personal loan if you know it’s for a good cause, such as reducing the interest.

#2: What is the interest rate?
Interest rates

Image Credits: Investopedia

Speaking of interest, here’s our next point.

Before you borrow money, understand that the lender will make a profit by charging you interest. According to Investopedia, interest is a charge applied to you, expressed as a principal percentage. And, of course, a lower interest rate is better for you as the borrower. 

However, it’s not as simple as it seems. There are two rates to consider: Applied Rate (AR) and Effective Interest Rate (EIR). In short, AR keeps the loan principal as a constant over the life of the loan. In contrast, EIR calculates the reduction in principal as you pay down the sum.

Do more research if you are unsure of the terms.

#3: Are there other charges?

In addition to interest, there may be additional fees.

Possible charges include a fixed annual fee tagged to borrowing, a late payment fee if you miss a payment, or a change fee if you need to renegotiate your loan terms.

Some banks even charge an early repayment fee as early repayments affect a portion of their predicted profits. Be aware of these possible charges before you move forward with the application.

#4: Can you manage the loan repayments?
loan repayment plan

Image Credits: The Economic Times

When considering whether to take up a personal loan, you must decide if you can handle the repayments.

Once you know the interest rate, extra fees, and anticipated monthly repayment amount, make necessary calculations from your income to see if you can afford to pay it back.

To do so, you want to write out a detailed budget including your spending needs on groceries, household bills, and miscellaneous expenses. From the breakdown, see if you have enough leftovers to weather an unforeseen financial storm.

Yes, that’s for your rainy days.

#5: How will it affect your credit score?

Lenders use credit scores to decide whether to issue you a loan. Credit scores affect loan terms such as interest rates, tenure, and principal limits.

Your payment history, the ratio of debt to credit, the age and quantity of your accounts you own, and any derogatory reports such as loan defaults can affect your credit score.

If you think you can do without a personal loan this time around, then skip it. Ensuring that your credit is in good shape will help you get a better loan in the future when you seriously need it. 

#6: What is your borrowing limit?
Singapore 50-dollar notes

Image Credits: Yahoo Finance

Are you aware that The Monetary Authority of Singapore (MAS) has established a Credit Limit Management Measure (CLMM)?

It prevents financial institutions from lending new credit facilities to borrowers with debts greater than six times their monthly income. This credit limit helps to protect borrowers from getting into high debts too much to bear.

And of course, other than CLMM implemented by the authorities, other factors will also affect your borrowing limit. This includes your credit score, monthly salary, and the relationship you have with the bank.

#7: How reliable is the lender?

Be mindful that some people and institutions may not be worth your time and transaction in any situation involving money.

If a lender fails to run a credit check, seems disorganised, or cannot answer basic questions, be wary. You want to deal with a reputable banking institution and not one that agrees to a loan without reviewing your credit history.

#8: When will you get the funds?
two men shaking hands

Image Credits: Jmc Accounts

Most people seeking personal loans are racing against time. If that is a factor, you want to find out how long is the approval process. From approval to disbursement of the loan, speeds will vary from bank to bank.

Here are three personal loans promising instant processing times:

Final thoughts

The decision to borrow money should be considered carefully. Evaluating and understanding your loan’s reasons, the interest rates, loan repayments, and more mentioned in this article can help you make the best decision possible when seeking a personal loan.

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Planning to get married? Here’s how much it costs in 5 years time

According to a study conducted by ValueChampion in 2019, the average cost of getting married in Singapore  is consistently increasing over the years. The average cost of a wedding banquet skyrocketed from S$923 in 2011 to S$1,392 in 2019. That’s an increase of 51% in just over 8 years, far outstripping MAS core inflation rate of 14% during the same period. There is little to suggest that this upward price trend will not continue once things stabilize post Covid-19.

Cost of a Dream Wedding in 2025

Based on past wedding inflation rate of 32% over a 5-year period, the estimated total cost to hold a dream wedding in Year 2025 would be $100,000.

While Year 2025 may seem too far away to start planning for your dream wedding, the figures have shown how frightening wedding inflation rates have been and will continue to be. $100,000 is an intimidating amount for any young couple to cough up. Therefore, it is important to start planning and saving up for your dream wedding early. For a start, angbaos from family, friends and guests received will definitely help to reduce the total size of the bill. Here are some ways you can mitigate the costs of your dream wedding.

Negotiate with Wedding Vendors

While this may sound obvious, many customers hardly negotiate as they are afraid of embarrassing themselves for fear of appearing “too cheap”. Sometimes, negotiations need not always come in the form of price reductions. For instance, one can ask for freebies such as flower bouquets or floral lapels from the vendor before committing to a bridal package. Wedding banquet providers may also be willing to sponsor wedding favours and waive corkage charges.

DIY For a Personal Touch

Not all of the items need to be procured from wedding vendors. Couples can borrow certain items from friends or simply just do-it-yourselves (‘DIY’). For instance, there is no need to hire a professional company to dress up the reception table. There are plenty of images on Pinterest and Instagram that serve as easy references for couples to do-it-themselves. Furthermore, DIY adds an element of personal touch that will leave a lasting memory for your guests.

Choose the Right Financing Option

The most significant part in mitigating the cost of your wedding is choosing the right financing option. A Personal Loan should definitely be considered if a one-off borrowing is required. A personal loan is a more financially prudent option compared to credit card debt. For example, OCBC is levying 0% interest rate and only a one-time processing fee of 4.5% (Effective Interest Rate 5.20%) for its Balance Transfer Loan. This is significantly lower than a typical credit card interest charge of 25% for roll over amounts. For a $50,000 loan, the savings in interest payments is easily over 5-figures over a 12-month period! Hence, a personal loan can be more a financially prudent alternative to a credit card debt.

To access Balance Transfer Loan, simply borrow from your unused credit limit from other banks to enjoy 0% interest rate. Alternatively, one may turn any unused OCBC credit card limit into cash via the OCBC Cash-On-Instalments with no need for additional income documents. Repay with fixed instalments over 12 to 60 months and pay effective interest rates as low as 9.06%. Such smart cash flow management would net you tremendous savings since interest on credit card debt is easily a staggering 25%!

Finally, even if one does not have any existing unused credit card limit, do not worry as one can still tap the OCBC ExtraCash Loan or EasiCredit. The loan amount disbursed will be dependent on your annual income. Inclusive of the one-time processing fee, the effective interest rate for ExtraCash Loan could be as low as 10.96% with fixed repayments over 12 to 60 months. On the other hand, EasiCredit offers greater flexibility as you withdraw what you need at 1.74% interest rate per month.

Application for personal loans from OCBC Bank can be performed conveniently via MyInfo. This minimises the waiting required which can help to lessen any wedding jitters! A host of convenient repayment options exists to ensure that you never miss your monthly bill!

Conclusion

Holding a dream wedding in front of your loved ones is the aspiration of many lovebirds. When planning for your dream wedding, consider the suite of Personal Loans from OCBC since this is a superior financing option over credit card debt. Proper financial planning ahead can go a long way to ease the financial burden of holding a dream wedding in Singapore.

Visit OCBC for a comprehensive suite of personal loans that grant you easy access to cash without having to wait for an eternity:

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Best Personal Loans in Singapore with the Lowest Interest Rates (for 2019)

OCBC, HSBC and Standard Chartered offer the lowest interest personal loans in Singapore, available exclusively on SingSaver.

Editor’s note: Personal loan and bank rates are subject to change. Last updated 7 October 2019.

Whether it’s due to an emergency or simple cash flow management, most of us will need a personal loan at some point. Personal loans do get a bad reputation sometimes, but if you understand how to manage cash flow and know how to take advantage of promotional interest rates, they can be used to your advantage.

The most important factor when deciding on a personal loan is the interest rate for the personal loan. The lower the interest rate, the better. This is especially true if you need to borrow a large amount. Interest rates being offered via SingSaver are often lower than the ones being offered by the bank but also take note that ultimately, the final loan interest rate will also take into account your credit score, salary and repayment history.

Also pay attention to any admin or processing fees involved (sometimes, they are waivable), annual fees, how quickly you can get your cash as well as the monthly instalments to be repaid. Here’s a quick guide on the dos and don’ts when applying for a personal loan. We’ve compared the lowest interest rate personal loans available on the market right now and shared them below.

S$20,000 LOAN WITH 3-YEAR TENOR

Bank Loan Flat Annual Interest Rate Effective Interest Rate (p.a) Processing Fees Monthly Payment
OCBC Personal Loan 3.5%* 7.27% $200 $614
HSBC Personal Loan 3.7%* 7.00% $200 (min of $88) $617
SCB CashOne Personal Loan 3.88%* 7.97% $199 (waived as cashback) $620
*NEW* SCB CashOne Fee Free Personal Loan 4.38%* 8.2% None $630

*Exclusive rate only available on SingSaver

1. OCBC Personal Loan

Enjoy the low interest rate of 3.5% p.a. (EIR 7.27% p.a.) — the lowest in the market currently — when you apply for an OCBC Personal Loan. This rate is exclusive for new to OCBC loan customers who apply via SingSaver. In addition, receive up to $320 in Capitaland vouchers with a minimum loan amount of $8,000. (Note: existing OCBC loan customers will be offered an interest rate from 4.7% p.a)

The downside for this loan is there’s a one-time processing fee of 1% of the loan amount. So if you’re looking at a $20,000 loan amount, that will be a processing fee of $200.

Do note that you will need to open an OCBC Credit Card or OCBC EasiCredit account to service your loan. Your maximum credit limit will be 6x your monthly salary if you’re earning $120,000 a year and above (if not, it will be 4x your monthly salary). Click the “Apply Now” button below, which helps you apply for both the credit account and cash loan all at once.

SingSaver Exclusive Rate

This low rate of 3.5% p.a. (EIR 7.27% p.a.) for your OCBC Personal Loan is exclusive to customers who apply through SingSaver and is not available on the bank’s own website.

Eligibility

Nationality Age Minimum Annual Income
Singaporean or Permanent Resident (PR) 21 – 65 years old S$30,000 and above
Foreigners (residing in Singapore) 21 – 65 years old S$42,000 and above

2. HSBC Personal Loan

If you’re looking at a loan tenor of 2 to 4 years, the HSBC Personal Loan offers the best annual interest rate of 3.7% p.a. (EIR 7% p.a.) for all income levels above S$30,000 per annum. This interest rate is only available on SingSaver and cannot be found on HSBC’s own website. 

The HSBC Personal Loan also offers the longest loan tenor on the market — you can spread out your payments over up to 7 years. Enjoy a waiver of the S$88 processing fee as part of your welcome offer.

Loan amounts range from a minimum of S$5,000 to a maximum of 4x your monthly salary. If your annual income exceeds S$120,000, you can borrow up to 8x your monthly salary, or a maximum of S$200,000.

Foreigners residing in Singapore will need a minimum annual income of S$40,000, and may borrow up to 2x their monthly income, or a maximum of S$100,000.

Nationality Age Minimum Annual Income Other requirements
Singaporean or Permanent Resident (PR) 21 – 65 years old S$30,000 and above N.A.
Foreigners (residing in Singapore) 21 – 65 years old S$40,000 and above Employment Pass with at least 12 months’ validity

3. Standard Chartered CashOne Personal Loan

With a guaranteed flat interest rate of 3.88% p.a. (EIR from 7.63% p.a.), regardless of loan amount or tenure, the Standard Chartered CashOne Personal Loan is one of the best options in the market.

There are no processing fees for this loan but Standard Chartered charges an annual fee of S$199 (waivable for the first year). Subsequently, a S$50 fee waiver will also be awarded (in the form of a cashback) from the second year onwards if all payment is received by the due date for the past 12 months.

What’s more, you can now get instant approval and loan disbursement – no more waiting 3-5 working days to receive your cash! From now till 29 February 2020, you can also receive an Apple AirPods worth $239 when you apply for a minimum loan of $10,000!

Nationality Age Minimum Annual Income Other requirements
Singaporean or Permanent Resident (PR) 21 – 65 years old S$30,000 and above N.A.
Foreigners (residing in Singapore) 21 – 65 years old S$60,000 and above • Foreigners must be holders of P1, P2 or Q type Singapore Employment Passes
• Q Pass holders must have minimum 1-year validity remaining on their passes

4. *NEW* Standard Chartered ‘Fee Free’ CashOne Personal Loan

For a limited time between now until October 31, Standard Chartered are offering a fee-free personal loan with a flat interest rate of 4.49% (EIR from 8.4% p.a.). It comes with:

  • annual fee permanently waived
  • no early redemption fee (after 9 months)
  • instant approval and cash if you apply via MyInfo
  • $160 cashback for successful applicants with minimum $20,000 loan

As there is no “lock-in” period, this limited offer is ideal for people looking for a fuss-free (and fee-free!) product as a means for investment or quick emergency cash.

Nationality Age Minimum Annual Income Other requirements
Singaporean or Permanent Resident (PR) 21 – 65 years old S$30,000 and above N.A.
Foreigners (residing in Singapore) 21 – 65 years old S$60,000 and above • Foreigners must be holders of P1, P2 or Q type Singapore Employment Passes
• Q Pass holders must have minimum 1-year validity remaining on their passes

If you’re still undecided, we’ve compared all the personal loans being offered by banks so you can easily compare the various terms and conditions. Compare and apply through SingSaver now and save more with exclusive welcome gifts and better interest rates.

Alternatively, check out our summary of the Best Personal Loans in Singapore 2019 for our recommendations of the best loans based on different needs.

This article first appeared on Singsaver.com.sg.

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