A few Singaporeans are able to cope without taking personal loans. Therefore, their credit score will not be as significant. However, it can happen that an urgent need for cash suddenly comes up.
Loans are useful whether you need money to purchase your car or house. However, you will not be able to benefit from this financial tool. This is especially if your credit score is poor. Here are ways that will help you grow your credit score.
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 moneylender 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.
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.
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 applications. 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 licensed moneylenders 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.
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.
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 moneylender 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 moneylender 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 moneylender 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. Legal moneylenders and other lending institutions 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 moneylender will not let you take out a loan you cannot repay.