Singaporeans know the vital importance of loans in their lives. But, only a handful understands how to keep your credit rating healthy. The standing of your credit score can significantly affect your future. With this sentiment, it is helpful to know what breaks or makes a healthy credit rating.
Whenever you apply for a big amount of loan, either from banks or other financial institutions, they will pull out your credit rating. It lets them see your loan history and if you were able to repay each one diligently. Financial institutions have various ways of interpreting credit scores. However, your credit history will usually impact your future loans.
Most banks and lenders will base your loan approval, loan amount, and sometimes interest rates on how well your credit rating stands. If you want to get a copy of your credit report, you can have it from Credit Bureau Singapore at $6. The credit score can range from 1,000 to 2,000. Also, the grading reflects AA as the best and HH as the worst. In addition, your credits in other countries will not be considered.
Credit Bureau Singapore will only keep records of your credit rating. However, it is completely up to you to keep it in shape. But, it will depend on the particular lender on how they will interpret it concerning your loan application. Here is a hint. Most lenders will reject loans applications if the borrower’s credit score is CC and below.
However, there will be instances when a Singaporean will not have a graded credit score. It happens when an individual has no credit history or has a past or current bankruptcy record. In addition, it applies if all accounts yet are closed, and the record only shows Credit Applications.
Your loan application may not get approved. Or your licensed moneylender will offer a lower amount of loan. For instance, you need a certain amount of cash for your business, house improvement, studies or health issues, but you will not be able to have it.
Singaporeans need a house loan to buy a house. If you have a negative score, you can pay the down payment in cash if you have enough savings. Or settle for a lower amount of loan. However, it will be almost impossible to get a car if you cannot acquire a car loan. You can use the car loan to pay the car’s down payments, additional fees and taxes.
If you can’t get a student loan, you might not be able to get the degree you want. It may cost you your dream career. On the other hand, even if you earned a degree, there are times when employers in specific fields such as finance, law, or politics will consider your credit rating or history. They may not be able to check if directly from the Credit Bureau. But, they can still require you to pass a copy to them during the interview. Some employers refuse to hire individuals with bad credit scores.
Even though you have small credits from various credit cards, having a handful gives a red flag to the potential lender. Also, it will not be helpful if you close all accounts. Instead, keep an account or two and pay it on time. It helps to keep your credit rating healthy.
As said a while ago, a no-credit history reflects as ungraded credit. There is nothing to be evaluated. So, the lender will not know if you are a low-risk or high-risk borrower. It poses a problem because lenders usually refuse to approve big loans to those who have unknown risks. Opening a credit account and remembering to service the payments is better.
While having no credit history is not good, having too many loans is also a red flag. It may seem that you have financial desperation. It usually happens to those who do not know that they have applied for insufficient loans.
For example, an individual applied for a car loan. The car loan was approved. However, he underestimated the actual cost of having a car. In addition, there are other things to be paid aside from the car’s exact price. Therefore, you need to keep up with the unforeseen costs. So the person applied for a personal loan. It is better to assess all the costs before getting a loan to make a well-informed decision.
Also, there are times when a person gets loans to cover repayment. Use a loan calculator to estimate how much repayment you can handle correctly. This way, you can avoid getting personal loans just to payout an existing loan.
Some Singaporeans think it is better to apply for loans simultaneously and choose one that best fits a particular need. But, this will not be reflected nicely in the credit ratings. Also, you will look too needy. It looks like you are asking for loans all over the place. Before applying, shop around and compare the interest rates of various loans. Afterwards, you’ll know which one is best for you.
Your moneylenders have to report your payments. Therefore, it will reflect your late repayments in your credit rating. If you are not diligent with the repayment terms, your future lenders will consider you a high risk. Do not hesitate to talk to your lender if you know you are will late with your loan obligations. They are usually helpful and will be willing to adjust the repayment.
You can still clear your bankruptcy status. However, it will continue to reflect for the next five years. Therefore, it can get in the way of your car loan, house loan or business loan.
If you consistently fail to repay your debt, this will be reported as a loss. Defaulting may seem to be an easy way out of a big loan. However, it will be in your record. Plus, it will greatly pull down your credit score and your hopes to get new loans in the future.
Avoid being labelled as credit hungry by not making multiple loan enquiries. Those who badly need cash go to various lenders to get a loan. It doesn’t look nice for future potential lenders as they can also see your enquiries in your credit history. If you have to make a couple of loan applications, always have an interval.
For example, do not attempt to get a house loan and another personal loan if you realize you need more cash for the down payment. Instead, get your home down payment from your Central Provident Fund (CPF) if you are getting a Housing and Development Board (HDB) flat. Then, use a personal loan to pay other costs as personal loans are more flexible than house loans.
Do not ignore your moneylender’s letters to remind you of your payment. Lenders are willing to help you adjust their repayment terms if you tell them your status instead of hiding and defaulting. If you know you are short for the coming scheduled repayment, tell your lender ahead of time.
If you have a bad credit rating, you can repair it. For example, take out a small loan and repay it diligently. It will take some time, probably a year or two. But, it will help in the long run as you will then be able to get a higher loan. In addition, you will be able to get a loan at $500 without worrying about your credit score. However, expect most lenders to give you a higher interest rate.
If you don’t pay your loans, you might never get another loan anymore. It might be impossible to get a home, car or student loan. Have your debt reconstructed if you get caught in a spiralling debt and think it is impossible to pay all your loans. Also, get in touch with a credit counsellor.
If you need a flexible low-interest loan to take your credit rating back up, drop by Cash Mart. Also, chat with the friendly staff to start a smooth process of getting your personal loan. Cash Mart offers various loan solutions when you need them the most.