Most of us believe that having a high credit score either from the Credit Bureau of Singapore (CBS) or DP Credit Bureau (DPCB) is too difficult. On the contrary, it’s easy to achieve a high credit score yet this requires financial discipline and time.
In other words, you shouldn’t expect your credit score to increase drastically after a few weeks or even months of paying your debt on time. If you recently defaulted on a certain type of loan, you may encounter a lot of banks that will decide against loan money to you for several years! Financial institutions keep a record of borrowers whose loans were forced to be written off by banks. This record will remain in your credit report whether or not you have settled the amount with the financial institutions.
What Is the Highest Credit Score?
The highest credit score depends on the rating system used by the two credit bureaus. CBS’ rating system ranges from AA (Score 1,911-2,000) to HH (1,000 to 1,723). You have the least probability of default when your credit score falls under the AA category, which is below 0.27%. Borrowers who have a risk grade of BB (Score 1844-1910) and CC (Score 1825-1843) may have either late repayments or delinquent accounts. The probability of default for these categories ranges between 0.27% and 0.88%.
You have a weak credit score when you have a recorded number between 0 to 420. A score between 421 and 580 indicates a fair rating, while the DPCB classifies a good credit score falling anywhere from 581 to 720. A strong credit score ranges between 721 and above, although 781 is usually the highest number.
How Much Does It Cost to Get a Credit Report?
You can get a copy of your CBS credit report for $6. You should make sure that all details are accurate to avoid being mistakenly categorized under the wrong credit grade. A DPCB report costs $2.5 each time you request one, but you can get your first-ever report for free. According to the bureau, they may also waive the fee for subsequent requests under certain conditions:
- If an Experian Bank Bureau member issues an approval or rejection letter to a consumer
- The consumer requests a report within 30 calendar days from receiving the letter at the Experian Bank Bureau’s office.
- Experian Bank Bureau members have searched for a consumer’s credit report (ECCR / FCCR) to decide if they should approve a new loan.
- The members acquire the report by using Experian Bank Bureau’s website within a specific period from the search date
DPCB offers a free credit report to support the Association Banks of Singapore’s initiative for consumers who recently applied for new credit facilities. If you see any inaccuracies in the report, you should expect to learn about the dispute resolution within 10 business days. Take note that most banks and financial institutions in Singapore won’t check your credit score if you apply for unsecured loans and credit facilities worth less than $500.
Factors That Affect Your Credit Score
CBS and DPCB may have different credit scoring systems, but they use the same factors when determining your creditworthiness. Payment history and owed amounts are likely the two biggest factors when evaluating borrowers of new consumer loans, meaning that untimely monthly payments and large outstanding balances can lower your chances of approval.
The other factors that affect your credit score include the length of credit history, new credit and types of loans. Credit scoring is dynamic so finding out the actual importance of each factor can be difficult. However, you should take note of these elements and use them as a guide when financial institutions reject your application.
Simple Ways to Improve or Repair Your Credit Score
If you have a poor credit score either from CBS or DPCB, the simplest way to fix it requires you to take out a small personal loan worth $1,000 or below. You should settle it in full within a short amount of time. In case you still have credit cards, always make sure that your payments are in full and on time. Banks could classify your accounts under a delinquent status if payments were made beyond 30 days.
You should keep doing this for one or two years to move up to a higher credit score category. You should also keep your debts under control to sustain your progress. A good benchmark involves the 35% debt-to-income ratio, which means that you aren’t spending more than 35% of your gross monthly income on recurring debt.
If you have more than five credit cards, you should consider trimming them down to three or two cards. It’s easy to overlook payments when you need to remember a lot of payment dates and billing cycles. You shouldn’t also have more than one personal line of credit to avoid the temptation of spending money.
1. Never Fail To Pay Your Loans
Failing to pay your loans is always reflected in your credit history. This often might stay on the records indefinitely. You need to realize that defaulting only makes it hard to access credit.
Meaning getting a home loan, credit cards, and applying for personal loans is difficult. Be sure to talk to the financial institutions if you will not make the due date. You could consider seeking credit counselling. Then you can get the debt restructured. This might lower the credit score.
However, this is better than failing to make a remittance. Additionally, defaulting could lead to legal actions. Certainly, you do not want lawyers and debt officers at your doorstep.
2. Consolidate Your Debts
There is a much simpler and ideal way to grow your credit rating. This you can do by consolidating your debt. By consolidating your debt you are able to combine all the unsecured debts.
In so doing, you will only need to remember a single due date. This also means interest rate charged on a single loan. Therefore, you are able to pay all your debts easily. Additionally, having a good payment record will help grow your credit score.
3. Do Not Send Multiple Loan Enquiry
Sending multiple inquiries is not recommended within a short period. When a loan officer realizes that you have sent 5-6 loan applicationns. All these inquiries being under a month will have you considered to be “credit hungry.” From this, it shows that you have some financial difficulties.
When you are experiencing financial difficulties, it will be hard to repay additional loans. Based on this the officer could reject the loan application. Therefore, the ideal way of dealing with this is you always do research. Look at the financial institutions near your area. Try and find the one that is offering the lowest interest. Ensure that you do this before you send out an application.
4. Only Keep Credits Cards You Always Use
There is a way to go about this. Make sure that you close off those credits cards you do not always use. When you have the credit cards only for personal use. Then you do not need to possess more than three cards.
Only keep the credit cards that you use often. These cards should also come with lower interest rates. In so doing, you are able to manage the credit card bills with ease. Additionally, you will be able to save on the yearly membership fees.
5. Always Repay Your Loans Promptly
Now that you can consolidate all your debt. You have also managed to make some savings on your credit cards annual membership fees. It could also happen that you receive a loan. This you can use it to repay your debts. Doing so you will be able to grow your credit score. Therefore, ensure that you make the repayments on time.
You need to realize the effects of any waived fees. Therefore, regardless of whether your financial institution waives off the late repayment fees. You need to be aware that it will still appear on the credit report. This can have some adverse effects. Thus when you are getting the second or even the third letter reminding you of the late payments.
Unfortunately, your credit rating will have dropped. One thing to always keep in mind: pay your monthly remittances on time at all times. In addition, make this amounts in full every month. When you realize that you might miss the repayment schedule. Be sure to inform your financial institutions in advance. This way, they can help you come up with an alternative payment plan.
Credit Rating vs. Credit Score
At this point, there are things that you need to understand. There is the difference between credit rating and credit report.
Credit Report: This is derived from all your previous credit records. This will include your loan requests in the past. It will also show the history of the repayments. This will clearly show whether you were able to repay the loans diligently.
Credit Rating: Through looking at your credit records, the rating can be determined. Rating may be done by officers from banks. A financial institution loan officer can also do the same. Based on this, the officer will decide whether you are creditworthy. To be able to do this, the officer will look at some factors. These are factors like your job stability, the repayment history. In addition, other factors will be considered.
Singapore’s Credit Bureau
This is Singapore’s credit institution. It is an Association of Singaporean Banks and Infocredit Holdings. The CBS aggregates all the credit-related data among its associates. Also, a proprietary algorithm is employed by the Bureau. This monitors how borrowers use their credit lines.
As earlier mentioned, credit score is derived from previous credit records. Therefore, when your risk grade is BB or CC. It is understood that you are normally late in repaying your loans. Having a DD grade and lower show that you have defaulted. This means that you failed to pay your debts.
Realize that when you have a lower credit score. Financial institutions or banks are less likely to approve your application.
Although growing your credit score will take some time. However, the above-given tips will help you improve your grade. You will be able to achieve this in 1 to 2 years. During this time, you will be ready to take out a major loan. It will also give you time to get your finances in order.
Remember: A prudent financial institution will not let you take out a loan you cannot repay.
Consumers should request a copy of their credit reports at least once every year. By doing so, you can be sure that your credit score remains high enough for a bank or financial institution to approve your loan application. If you recently acquired an updated credit report, contact us today to find out the best financial institutions that offer low interest rates for people with high credit scores.