A good credit score has much potential for a good future. The credit score can be a significant factor in many ways whenever you are applying for a home loan, opening new lines of credit or even if you need some credit in bad times. A proper credit can transform a person living in many ways and can open a new window of opportunities. However, the truth is most of the Singaporeans are unaware of even there credit score and how it affects them to get a credit card or to get a loan from the bank. So first let’s know what is a credit score and how can it affect you?
Your credit score is used to evaluate your creditworthiness, and how likely you are going to repay your arrears. It is imperative and uses into consideration whenever you apply for any form of loan or credit card. Whenever any person applies for the loan or a credit facility or uses the credit card from Singapore all the information get entirely onto a centralized organization, the Credit Bureau Singapore(CBS). The CBS is a government body and the joint venture between the Association of Banks in Singapore and an Information management firm.
From the Guidelines of Credit Bureau Singapore, your credit can be affected by your utilization pattern, account delinquency data, recent credit, credit account history and available withstand credit with you. Your credit score is based on different types of calculations. The big organization which provides credit in Singapore like Credit Excel Capital that keeps their calculations as the mystery, so it cant be duplicated by others. For a perfect credit score there are a couple of practices that affect your final score and here is the list if you are doing anything from the list you are doing something wrong and try to make it right as soon as possible.
Missing your payment Schedule
The Biggest factor that can turn down your credit score from significant margin is your payment history. One missed payment can drop as much as 100 points even if you have an excellent credit score. The longer you take to pay your bill, the worse the impact will follow. Always try to pay upfront as soon as your due date approach, If you are just a couple of days late, you might not see a marginal difference. However, once you reach the 30-day late mark, it can be a problem.
Make your best plans with your finances, or If you are not that much good with handling finances, you can always refer apply licensed money lender to manage your financial conditions. Always try your best to make payments on time and in full.
High Credit Utilization
If you have an excellent credit record, there’s a fair chance you can carry small balances on your cards. Your credit score will remain good if you use 30% or less of your possible credit each month. However, when you start abusing the credit, the number starts to escalate, and it will be swift. You can see variations into your credit cards without realizing it.
Regularly try to keep caring your low balance pay off, so that you can avoid your debt paying each month with interest.
Not having any credit card
Many Singaporeans doesn’t have a credit card. Thinking it will make them bound to more responsible and help them getting big loans more efficiently in the future. They are wrong entirely.
By not using a credit card or even not having a card credit means you didn’t have any credit history. This indicates that when you are going to apply for any house loan or any other type of loan banks will not have a credit history of you to rely on.In any circumstances your commitment to not use credit card harm in other ways there will be no credit history of you present.
When you close an old account, you not only reduce the amount of credit, but you also delete all your credit history related to that account. If you even want to close an account try to close the newest accounts first. Because senior account have longe credit histories and as much as 15% of your credit score depends upon how long you have used credit.
For example, suppose you owe a credit of $5,000 from some bank and including you all credit limit you have around $20,000 as your credit limit. If every condition is real, your credit utilization is 25%. If you close an old account, your overall credit limits fall to $10,000, and your ratio will expand to 50% damaging your overall credit score.
Nobody can have perfect credit card history, but make sure not to close an old account as prior history is more important than newer.
Application For Too Many Loans over a Brief Time Period
If you are a shopaholic and have multiple forms of the loan over a short period, it can hurt your credit score. In Singapore, If you apply for maximum three personal loans over a month, your credit score will drop.
In Singapore generally, people who buy the home for the first time used to take more personal loans to cover down the payment on top of a hdb home loan. By taking many personal loans within a short time signify that your financial conditions are not going well.
At the time of taking loan decide how much you are going to need and take it as a single loan. Don’t take many small loans, have a clear thought how much you need and take another loan after some time.
Appeal For Too Many Credit Cards At Once
When you apply for a credit card, it increases your credit inquiries made by banks. Having too many inquiries suggest that you are not in a good financial condition and hurt your credit score. Try to apply for the single credit card at once and If that not work out apply for another credit card after some time. Before applying make a list and compare different credit cards and decide with which bank you should go toward.
Many of the Singaporeans who don’t have credit card assumes their card score will be good and you can a get a personal loan whenever they want. However, as the above scenario highlighted its possible even for persons having good financial history and spends well even end up having a bad credit score.
Only by knowing some common mistakes and the common factors Singaporeans can ensure they have a healthy credit score. You can always check your credit score at Credit Bureau of Singapore by just paying the nominal fee of $6.50.