How to Improve Your Credit Score Fast
The term credit score is probably the most important in the financial life of any Singaporean. Lenders use it to gauge the creditworthiness of loan applicants’ in Singapore and determine whether to approve or decline applications. So, if you find yourself with a poor credit score and want to get a loan in Singapore, how do you improve it fast? Keep reading to learn expert tips for improving credit score in Singapore.
How is Credit Score Calculated in Singapore?
A credit score in Singapore is a four-digit number that is derived from your personal payments in the past. The number ranges from 1000 to 2000, with 1911-2000 being categorized as the best of (AA rated) and 1000-1723 as the worst (HH rated). If you are rated AA, you are a low-risk party, and most lenders will not have a problem advancing credit, from personal loans to renovation loans in Singapore.
To arrive at the four-digit figure, the Credit Bureau of Singapore uses advanced algorithms on your financial history data. Here are components that can impact your credit score in Singapore:
- Credit exposure: When you borrow more, the score is likely to go down.
- Adverse credit history: If you fail to repay loans on time, the information will pull down the score.
- Making too many inquiries: These inquiries make one appear desperate and pull down the score.
- Poor credit mix: If you only use one line of credit, such as credit cards, your credit mix will be considered poor and can pull down the score. Instead, you should target a good mix, combining one or two credit cards with something such as a personal loan and mortgage.
- Delinquency: If you have criminal cases tagged on your name, they can pull down the credit score.
Note that even with a specific score, there are some lenders who will decline your application for a loan in Singapore, while others might approve. For example, most online moneylenders in Singapore are willing to approve loans of persons with scores that would otherwise result in direct rejection by banks.
How to Improve Your Score Fast
If you want to improve your score fast, here are some useful tips to consider:
- Correct Errors in Your Credit Report
When calculating your credit score, the Credit Bureau of Singapore relies on the information gathered from other organizations such as banks, insurance, and other moneylenders. If these organizations give the wrong information to the credit agencies, the score is likely to be incorrect. Therefore, start by getting a credit report, check it for errors, and have them rectified immediately. This could significantly raise the score.
- Clear Outstanding Debts
To arrive at your score, the outstanding debts feature prominently. So, if you already have a credit card loan, overdue utility bill or other debts, consider paying it first. Within months, these payments will start reflecting on your report and push it up.
- Do Not Close the Credit Cards with Bad Report
If you have a credit card that has a loan with a high-interest rate, the first instinct might be closing it down, but this is not a good idea. Instead, you should clear the debt but leave the credit card open to take advantage of the old history and maintain a good credit mix.
Apply for Loans in Singapore through Lendela
As your score improves, it is time to take advantage of it because you will be eligible to borrow funds from lenders at a lower interest rate. The best way to apply for a loan is using Lendela, a loan comparison site dedicated to simplifying the process. So, whether you want a renovation loan, car loan, or personal loan in Singapore, using Lendela will only require the following three steps.
- Visit Lendela website to create an account and fill a short application form. This should take you only a few minutes.
- Lendela makes applications to multiple lenders on your behalf and gets offers.
- You pick the preferred offer and an appointment is booked.
- Sign off the loan and get the money deposited in your account.
As you can see, having a good credit score is very important for the financial health of any Singaporean. Remember to ensure you only borrow money from licensed money lenders in Singapore because loan sharks can bring a lot of trouble. Finally, try to maintain your credit score at its best all the time.