Getting a high credit rating can offer you a huge variety of benefits. Most banks and other lending institutions are keen to loan you money when your credit score is in good standing. With this, you qualify for a larger personal loan amount, get it a lot faster, and even pay lower interests.
But, when your credit score is not so good, you may find it hard to get a home loan or a credit card. However, when you are concerned about ways of improving and maintaining your credit score, then read on the below guide. It will help you learn how Singapore’s credit rating system works, and what to do to enhance your financial standing.
How Credit Scoring System Works in Singapore
Singapore’s Monetary Authority has authorized only 2 credit bureaus to issue the credit scores and credit reports. These are:
DP Credit Bureau and Singapore’s Credit Bureau
These two institutions keep track of various features of your financial record and put together a report that contains details about all loans that you’ve taken, track records of your repayments, and also the type and number of inquiries that you’ve made to licensed moneylenders.
Using these details, the DP Credit Bureau and Singaporean Credit Bureau issue a credit rating for each person. This number is what gives potential lenders your likelihood of promptly repaying your debts. The rating issued by Singapore’s Credit Bureau varies from 1,000-2,000 while a higher score indicating lower lending risk for financial institutions. Likewise, DP Credit Bureau issues a credit rating that varies between 0-781.
Carefully Track Your Borrowing
It is important for you to recognize the impact late payment and also the acquisition of several credit cards have on your credit rating. It may not be possible for you to know the number of points your rating will fall for every one of these actions. This is since the credit bureaus calculate your rating based on a proprietary algorithm; such details are not available to the public.
Even then, keeping close tabs on every one of the above-described points will make sure that you keep on maintaining your credit rating at high levels. This way it will be a lot easier for you to access a loan or a credit card request approved by the banks.
Ways To Maximize Your Credit Rating
Different from what a number of people believe, it’s not that hard to for you to get a high credit rating. However, you will need a disciplined approach to this for the long term. When your credit score is low score and you would like to raise it fast because you may want to take a payday loan, it’s possible that you may end up getting disappointed. Keep reading for you to gain an understanding of credit scores and credit reports.
For that reason, it’s important that you maintain healthy financial practices in order for you to build a great credit score that can help you get suitable funding whenever you require it. In order to this, a regular adherence to some basic rules can give you some very good results.
1. Set A Limit The Numbers Of Lenders You Can Borrow From
A lot of Singaporeans take out loans to raise money for purchasing homes. Car loans are equally common. As if these are not enough, you may have 2 to 3 or more credit cards as well as personal loans.
Soon enough, you find yourself in a position that you need to keep track of numerous lenders. This may be a dangerous spot to be in since forgetting to make one payment could harm your credit rating. Just think about having to manage and keeping track of several bills from a number of lenders! The wise approach here is to have a limit of the number of moneylenders you can borrow from. Be sure to keep as few as possible, so it’s easier for you to remember.
2. Use Credit Cards Wisely
It’s very easy to go wild when you make shopping payments using a credit card. Although you may have a number of weeks before the due date for your payment so you can pay the lowest sum and defer the remainder. However, this approach will certainly backfire almost every time. More likely, you may end up accruing a huge amount of debt on your credit cards and thus pay a large sum of interest.
It’s better to use your credit card as a payment tool instead. Once you’ve received your monthly statements, you need to repay the whole amount. Provided you do this, a credit card can earn you rewards in lots of ways through earning substantial amounts as air miles or cash back.
3. Clear All Your Dues Promptly
Some people think that it’s quite ok to hold up payments provided that they pay the late payment charges too. However, this isn’t true. A delay past 30 days can get you in the delinquent category and with time, it will negatively affect your credit rating.
To avoid this, do keep a diary with all the dates marked that you’ve got repayment commitments. When you can’t repay promptly a personal loan instalment, you need to inform your lender before the due date of the payment.
4. Maintain Your Loan Requests To A Minimum
Making several inquiries for payday loans or new credit cards will lower your score. You may wonder why the credit bureau has to penalize you for contacting moneylenders from whom you actually borrow money from. Each time you contact a number of banks and lending companies within a few days, you create an impression that you desperately need funds.
Even though your intention will only be to have the best deal possible for yourself, you end up sending a completely different signal to moneylenders. By limiting your requests to a bare minimum may actually help you in maintaining a healthy credit score. For you to do this, you need to check out various guides available so that you are able to make informed decisions regarding your financial health.