Credit Report

What is a credit score?

When the coronavirus pandemic halted global businesses and normal activities, countries were in a race to contain transmissions so that they could resume operations and be at the forefront of pandemic-resilient areas.

A lot of business managers believe that if a country manages to contain the COVID-19 crisis and maintains best practices to economic gain as business would stick with efficiently-managed areas, and not those having problems with the pandemic.

There are certain parameters to know what countries are doing good in the fight against COVID-19, from the number of infections, casualties, and recovered patients.  In a way, that is how credit scores work in the world of finance – the countries being monitored are the consumers and the potential investor is the credit bureau.

There are two Singaporean bureaus that monitor your credit score – the Credit Bureau Singapore (CBS) and Monetary Authority of Singapore (MAS) – they both keep credit reports for consumers in Singapore.

A credit score is a four-digit score ranging from 1000 to 2000, used by the Credit Bureau Singapore (CBS). It measures a person’s creditworthiness: getting a score near 2000, will give banking and financial firms an idea that you are capable of repaying your loan on time.

However, a credit score near 1000 would likely give the impression that there is a high chance of delayed loan payments, or worse, a hint that you have avoided paying your debts in the past.

In other terms, those who have good payment history are graded “AA”, while those who have poor payment record, will have a “HH” mark.

Score RangeRisk GradeProbability of Default

How credit score works?

Crafting a credit score is a joint effort among major financial institutions and credit bureaus in Singapore – a consolidated credit report that shows consumers’ credit risk, credit history as well as payment history.

One’s credit score and report contain records of different accounts from various loan deals you had that would give the bank an idea of what kind of borrower you were in your past transactions.  In most cases, your record and buying behavior within the last 12 months will matter the most to your next credit application.

The whole credit report under your account will determine how high or low of a risk it is to lend you, from the perspective of a  bank or a lending firm.  Some people consider this as a defense mechanism for the banking institutions, to ensure that people are able to pay back.

Simply put, a credit score is one of the major references for lenders who are deciding whether a customer is qualified for loan approval or not.

However, one should understand that there are other risk grades that might affect your credit and loan approval, like the following:

  • Hx – Legal matters. If you are currently subject to bankruptcy or were currently summoned by the court, getting a loan approval might not be possible for you at the moment. This could also gravely affect your good credit status. 
  • Hz – This happens when you have defaulted on some occasions. For example, having a loan above $300 that you failed to pay within 3 months. Most likely banks will lend you a smaller amount than usual.
  • Gx – You have no credit information or report. This usually happens when you have never used a credit card before.
  • Bx – Common among retirees, inactive accounts are usually those that have credit report histories but all accounts have been closed.
  • Cx – When you rarely use credit or have never used it at all.  The system cannot give you a credit score. First-time loan applicants usually start with this grade.

How to access credit scores?

Credit Bureau Singapore Pte Ltd (CBS) as mentioned above, holds the most comprehensive report of consumer’s payment behavior from major financial institutions and major retail banks in Singapore. 

Intimidating? Yes, but getting a copy of your credit score is simple.  First, request a copy of your credit file online at any of the 62 SingPost Branches, at the Credit Bureau office, at CrimsonLogic Service Bureaus or at CASE office. A transaction fee of $6 and plus GST may apply.

In April 2016, consumers who availed a new credit facility with any of the financial institutions or CBS member banks are entitled to a free credit report.  You may view the list of CBS members on the official website.

Credit rating report on a blue table

4 Ways to improve Credit Scores in Singapore

Going to a financial bureau to seek professional advice can get somewhat intimidating and time-consuming. Just thinking and visualizing of long consultations with financial experts in formal suits can be dreadful for some.

As an end result, people tend to avoid discussions that center on how financing works, which may eventually leave people clueless about their actual credit scores.  In most cases, people would only care and talk about it when they are left without any recourse but to avail of a loan.

Credit score Singapore plays a huge part in a person’s application for various loans and credit cards – it affects your chance to get an education loan, a new car or a mortgage, rent a particular apartment, or your latest credit card application.

In some extreme cases, it can actually affect your dream job too: for instance, the chances of pursuing a career in finance can be hindered by a poor credit score.

A perfect example is the Monetary Authority of Singapore (MAS) decision last November 2019 to advise the checking of credit scores and credit reports of the employees and future hires in the finance departments of Singaporean-based companies.

In any situation, one cannot fix something he doesn’t understand. Learning the ins and outs of credit cards, what credit score means, and credit scoring works is one step closer to improving your financial stability and your chance to get the loan you need in the future.

Although the whole process of calculating one’s credit score may not be available to the public, here are some basic but fail-proof suggestions which could help you maintain a good credit score – things that if you do the opposite of, may end in you losing the chance to win that loan approval. So how to keep you credit scores in good shape? 

1. Always repay your loans on time

If possible, always pay your loans within the deadline, as that way, you will save your credit score from dropping significantly.  Remember that all delinquent behaviors are being recorded by Credit Bureau Singapore. 

Consider your first letter of payment reminder as a red-flag; receiving the second and the third letter means it has already affected your credit history negatively (whether or not the bank will issue a penalty fee).

Fortunately, there are ways that could help you avoid this situation. If you are dealing with house loans and personal installment loans, it is highly advisable to let your financial bureau (or adviser if you have one) know right away if you think you may miss payments. They might suggest other repayment schemes that are more feasible and fit your situation.

For credit card holders, try to at least repay the minimum total of your bill, until the last day of the payment cycle.

2. Avoid multiple loan inquiries within a short period of time

Being called “credit hungry” sounds negative enough. You don’t have to call a financial expert to ask if having that reputation could bring your credit score down. Always remember that having too many loan applications suggests that you are dealing with financial difficulties.

If you are facing challenges financially, getting another credit card, or having new loans on top of an existing credit may do you harm than good.  Besides, a competent financial institution will surely find out about this in no time.

It is worth noting that monitoring your account record also keeps you away from being a victim of identity theft.  Fraudsters can badly ruin your account record by applying for new credit, draining out the card, and possibly escaping payments. One inquiry could hurt your record by 10-20 points, which would remain in your account until a report or clarification about what happened has been made.

3. Avoid having too many credit facilities

Naturally, opening too many credit facilities might confuse you by having various billing cycles that could result in missed payments.  Shutting down credit cards that you no longer use is definitely a good option. This can also save you from paying the annual fee. 

As the old saying goes, never bite off more than you can chew.

4. Being loyal helps

Do you have a good business relationship with your bank or moneylender? That’s a plus point if you are trying to keep your record neat and in good shape. This also suggests that you have a good credit history and that you are a reliable borrower.

Credit score is important but definitely not your end all

True enough, credit score is a hot topic when you dive into the world of loans, credit cards, and investments. But it is not your end point. Keeping your credit score in good shape is important, yes, but in a city like Singapore, where not everybody can afford to maintain a high credit score, there are few licensed money lenders like Raffles Credit that would give you easy accessibility and eligibility without judging you and predetermining your ability to repay the loan.

Tagged as one of the most reputable and low interest legal money lending companies in Singapore, Raffles credit offers a reliable and fast way to get a loan.   Unlike getting a loan from a bank, you can now skip the long process that could take up to two weeks — which can defeat the purpose of why you are applying for an emergency loan in the first place. Raffles credit has no hidden charge, promises 60-minute loan approval and has a flexible payment scheme. No credit report needed.