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How To Bring Up Your Credit Score Risk Grade In Singapore

Understanding how your credit score in Singapore is evaluated is significant to being financially healthy. There will come a point in time in most Singaporeans’ lives when taking a bank loan is necessary. The most common example is a home loan, car loan, business or education loan. You may also use the housing loan calculator to determine your monthly payments for a simple loan. A credit risk grade of AA makes it easy to be eligible for such loans. When a large amount of cash is needed during an emergency, personal instalment loans can also go a long way.Those who cannot maintain a good credit score frequently find themselves underprivileged of these essential financial products. Unlike some other countries, banks in Singapore seldom vary the interest rate based on your credit grade. If you have bad credit, you will either be given a smaller loan or be rejected.This is why it is important to keep your credit score healthy. The worse it is, the less you can borrow for a car, house, education or starting a business. Here is how to bring up your credit risk score and get it to AA rating, the highest possible credit grade.

1. Repay loans on time every month

By the time you receive a second or third letter of reminder of late payment, your credit score would have dropped. This will happen whether or not the bank waives lay payment fines.For credit cards, always repay at least the minimum sum, before the billing cycle ends. At SingSaver, we recommend that credit card bills be repaid in full every month in order to save on the interest repayments.For loans such as mortgages or personal instalment loans, inform your bank early if you think you may miss payments. Alternatively, speak to a credit counsellor. It is possible that the bank will work out an alternative repayment scheme, which will do less damage to your credit rating.

2. Avoid multiple loan enquiries in quick succession
If you make four or five loan applications within a short span or within a single month of time, you could be identified as “credit hungry.” It has the meaning of typical behaviour for someone in financial difficulty, such as someone who has just been retrenched or is in debt.Spread out your loan applications whenever possible. If you are trying to find a cheaper interest rate loan, use the comparison tools on SingSaver to compare offers with the lowest interest rate. It is not advisable to apply for multiple loans and enquiries all at once.

3. Limit number of open credit facilities
In general, avoid having more than four to five credit facilities personal lines of credit, credit cards, personal loans, and so forth. At any rate, it is not advisable to hold six or seven credit cards or credit lines. You are likely to get confused by the various billing cycles and miss payments.Always close off credit cards you are no longer in use, which will also save you paying the annual fee. For personal lines of credit, there is little reason to have more than one. If you find a credit line with a lower interest rate, close your current credit line and switch to the cheaper one.

4. Never default on loans
If you default on a loan, it will appear on your credit report indeterminately. A single major default can make it impossible to ever get a credit card, line of credit, or home loan. If you cannot make repayment, always seek credit counselling and have your debt restructured. While it will lower your credit grade, it is better than defaulting. Furthermore, defaulting will result in legal action if you have the money but simply refuse to make repayment.

5. Meet short-term loan repayments to repair damaged credit
If you have a bad credit grade, the easiest way to repair it is by settling in full any short-term or small loans. Over time, this will go a long way to repairing your damaged credit once the bureau sees you are making repayments on time and in full.If you currently have a credit grade of B or under, start doing this a year or two before you apply for major loans, such as a home loan. This could bring you the desired AA rating by the time you send in your application.

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