Many Singaporeans can do without using personal loans for many months and even years. This can make their score to be rather too low. When you have a low credit score then you suddenly need money for some emergency. You can have a very hard time in getting a personal loan. It may be that you need some urgent cash to either pay for your car or house.
Then it will be challenging to raise the amount. But you can change this by increasing the limit score to enable you to qualify for the personal loan. So that you can make the most of this loan facility, you will have to grow your limits.
Here is a look at different ways of building your credit score.
Credit Rating Vs. Credit Score
Borrowers need to realize that credit reports and credit ratings are 2 different things.
Credit reports are based on past credit records. The report includes loans and repayment history as well as the rate that you repay your debts. When you cannot make timely payments for your loans, the info regarding your level of commitment is included in the report.
Credit rating is determined by your credit history. When you are getting a bank loan or from a moneylender. A review is done on your ratings which are derived from the credit history. Your lender establishes your creditworthiness depending on the payment history, ratings, income stability and other financial elements. A liable moneylender will not let you borrow money that you will not manage to pay.
Your creditworthiness will be established by your capability to repay your debts promptly or within a set time. When your rating is low, it may be hard to get a loan from banks or moneylenders. Most of the financial institutions may not approve the loan.
Ways To Improve Your Credit Score
Promptly Pay Your Loans
When you have an existing loan balance, then you may have to settle your loans so as to improve your scores. Making late payments will hurt your score thus reducing the chances of getting loans in future. When you have just requested for a personal loan and was approved successfully. You need to make the best of that opportunity to repay promptly and grow your credit-worthiness.
When your payments are late, the moneylender system will include this in your report. Thus as you get a third letter or even a notification to remind you of the outstanding balance. Your limit will likely have dropped significantly.
Repaying in full displays your seriousness and commitments. When you know you cannot pay on time, it is best that you notify your money lender much earlier in advance. In so doing, the lender can offer you suitable advice on other possible payment methods. This is often convenient for your situation.
Consolidating Your Debts
The best way to grow your score is by simply consolidating all your debts. It then means combining all the unsecured loans. Here you will simply need to look at the rates of interest and due date. When you merge all your existing loans, your rating and creditworthiness will actually improve. This can result in your credit score improving.
Nowadays, many Singaporeans can hardly manage without getting a personal loan. A personal loan will let you do those things you might take years to accomplish. Having a good rating can be a great thing when you want to get a loan in the near future.
Spacing Out Loan Inquiries
It is tremendously risky to submit multiple loan inquiries in a short span. When a loan verifying officer realizes that you have submitted 5 to 6 applications within a month. The officer will mark you as credit hungry borrower. Also, this implies that you are undergoing financial difficulties or are at financial crossroads. Lenders assume that, when you are experiencing a financial burden, that you may not be in a position to pay any additional loans. It thus means that loan approval, as well as verification departments, will reject your request.
The one way to go about such a situation would be to carry out a thorough research and locate the best moneylender near you. Go for the lender that has low-interest rates before you send any application. You also need to avoid sending several loan applications to different moneylenders.
Never Fail To Repay Your Loans
Failing to repay your loan balances can cause hurt your credit-worthiness. This automatically will appear on your record. When you default on the loan, it can be very hard to access a home loan, credit card, or a personal loan. When you are certain you will not manage to repay the remaining balance promptly. Then it is best that you talk to your bank or moneylender in advance. Letting them know is better than having to default. If in the past you have been submitting your installments successfully, your lender will recommend to you a suitable way forward.
Close Off Any Credit Cards That Are Not In Use
Avoid getting multiple credit cards. When you have multiple credit cards that you are not using. You may consider closing them off. The reason for this is since many due dates, billing periods, and annual fees can have you confused. When you have several credit cards, it is possible that you might miss the payments. Borrowers should realize that missed payments will hurt your credit score.
To help you avoid a similar scenario, you will need to close off those credit cards that you no longer use. For someone who is using credit cards for personal financing, then you do not need beyond 3 cards. Only retain those credits cards that you are using and that have low-interests. In so doing, you would be able to maintain your cards and also save on annual membership fees.
Building your credit score can take time more so if you have poor records. The above-mentioned tips will assist you in improving your credit-worthiness. Thus it will be possible for a borrower to get a loan in future.