Most individuals turn to banks or moneylenders for financial assistance. For some, they need it for debt consolidation, or renovation loans, or to have quick cash. But did you know that your loan application can be denied because of your credit score?
All your credit payment history is put on record. And it will be used to determine your credit score. Financial institutions use this score to rate your creditworthiness. That said, a high credit score will have an immense range of benefits while a low score will make it difficult to get a loan.
Don’t have a high credit score? This guide will list licensed money lender loans that don’t require a high credit score. Plus tips on how to build your credit score so you can get a credit loan Singapore at the best rates.
Loan Providers in Singapore
If you’re a Singaporean or a foreigner living in Singapore and find yourself in financial distress, you can consider taking out a loan. There are two main options: applying from the bank or an accredited moneylender.
Compare these two options and determine which one is right for you. The details below will differentiate the two options.
Banks
Eligibility requirements may vary from bank to bank. But typically, you must be:
- Between the ages of 21 and 65 years old
- Have the necessary documents like credit history proof, residency, and employment documents
Most banks extend loans to Singaporeans or Permanent Residents with an annual income of $20,000. If you’re a foreigner, you’ll need an annual income of $45,000 and above.
You’ll need to meet these requirements if you’re availing loan services from a bank. Additionally, most banks don’t offer unsecured loans if your annual income is less than $20,000.
Licensed Moneylender
A licensed money lending company in Singapore offers more flexibility. Take a look at the table below. It shows how much a borrower can get based on their citizenship and income eligibility.
| Citizenship | Annual Income | Eligible Loan Amount |
| Singaporean or Permanent Resident | Less than $20,000 | Up to $3,000 |
| At least $20,000 | Up to six times your monthly income | |
| Foreigners | Less than $10,000 | Up to $500 |
| At least $10,000 and less than $20,000 | Up to $3,000 | |
| At least $30,000 | Up to six times your monthly income |
Banks
Banks require more documents than a moneylender. That said, approval speed is slower. This is because they perform an extensive inspection on their clients. Some banks have shortened the approval speed to 1-2 days. So if you need a higher value credit loan, then it’s worth the wait.
Licensed Moneylenders
Moneylenders have faster loan processing speed (usually within an hour only) since they require only minimal documents. Additionally, they are not as strict when it comes to filtering their clients.
So you can expect to get funds within the day of your application. However, borrowers will be getting a limited amount of money. This lowers the risk that lenders take.
As previously mentioned, a credit score is a number used by banks and money lenders to evaluate a borrower’s ability to repay the loan. It’s an assessment of a person’s risk as a credit applicant.
For instance, if you have a history of late repayments or non-repayment, you’ll have a low credit score. You’ll be considered a high-risk applicant.
The table below shows how the credit rating is done by the Credit Bureau Singapore (CBS).
| Score Range | Risk Grade | Probability of Default | |
| Min | Max | ||
| 1911-2000 | AA | 0.00% | 0.27% |
| 1844-1919 | BB | 0.27% | 0.67% |
| 1825-1843 | CC | 0.67% | 0.88% |
| 1813-1824 | DD | 0.88% | 1.03% |
| 1782-1812 | EE | 1.03% | 1.58% |
| 1755-1781 | FF | 1.58% | 2.28% |
| 1724-1754 | GG | 2.28% | 3.46% |
| 1000-1723 | HH | 3.46% | 100.00% |
Banks
Banking institutions will check your credit score and history based on the credit report from Credit Bureau Singapore (CBS). They are relatively strict when it comes to credit scores. So if you have a low score, there’s a high chance your application will be denied.
Licensed Moneylenders
A money lending company in Singapore is more flexible when it comes to checking your credit score and history. They offer a hassle free application process. These licensed lenders take the risk of approving borrowers with a low credit score. This makes them an attractive option for those not eligible for a bank loan.
That said, you don’t need a high credit score to be approved. However, these lenders charge a higher rate as compensation.
Banks
Most banks offer lower rates compared to a licensed money lender in Singapore. These financing institutions also have different term options. So consider your payment terms during application. Longer repayment plans mean you’ll be paying your interest for a long time.
Licensed Moneylenders
A licensed money lender offers shorter payment terms. With a shorter loan term, you’ll be able to clear off your debt sooner. This is attractive for those who want to finish their repayment early.
How Low Credit Score Affects Your Borrowing Capacity?
Banks and moneylenders are willing to accept a certain level of risk. But if your credit score is too low, your application may not be approved.
Credit scores indicate your risk as a borrower. It tells financial institutions your likelihood of defaulting on a credit card or loan obligation. To compensate for this risk, lenders will charge you higher interest rates.
If you’re approved for a loan with a low credit score, you’ll pay more interest over time. The more you borrow, the higher the interest.
Since having a low credit score means you’re a high-risk borrower, banking institutions are less likely to approve your credit card or loan application. If ever you get approved, you’ll have a lower credit limit. This compensates for the risk the bank or licensed lender is taking.
Need a higher personal loan amount? You can also opt for secured loans and get a guarantor to increase your loan amount.
You can still apply for a personal loan from a licensed money lender in Singapore. They don’t require a high credit score. However, these lenders offer shorter credit terms as compared to banks. But this isn’t necessarily a bad thing. As previously mentioned, shorter loan terms allow you to clear off your debt faster.
Moneylender Loans That Don’t Require High Credit Score
Features
- Loan up to six times your monthly income
- 1-4% interest rate
- Up to 12 months, subject to the terms and conditions of the agreement
- Get your money on the same day of the personal loan application or as soon as the loan agreement has been signed
How to Apply
- Must be at least 18 years old
- For a Singaporean/Permanent Resident, you must have a minimum income of $2,000
- Visit the moneylender’s office or in-person consultation
Features
- Loan up to six times your monthly income
- 1-4% interest rate
- Up to 12 months, subject to the terms and conditions of the agreement
- Get your money on the same day of the application or as soon as the loan agreement has been signed
How to Apply
- Must be at least 18 years old
- Must have a minimum income of $3,000
- Visit the moneylender’s office or in-person consultation
Features
- Loan up to $200,000
- 5-15% interest rate
- Up to 24 months, subject to the terms and conditions of the agreement
- Get your money on the same day of the loan application or as soon as the loan agreement has been signed
How to Apply
- Must be at least 18 years old
- Minimum turnover of $60,000
- Business must be operating for at least 1 year
- No minimum salary required
- Visit the moneylender’s office or in-person consultation
Features
- Loan up to one time your monthly income
- 1-4% interest rate
- Within 1 month or on the next payday
- Get your money on the same day of the application or as soon as the loan agreement has been signed
How to Apply
- Must be at least 18 years old
- Must have a minimum income of $2,000
- Visit the moneylender’s office or in-person consultation
Features
- Loan up to six times your monthly income
- 1-4% interest rate
- Up to 12 months, subject to the terms and conditions of the agreement
- Get your money on the same day you apply for a loan or as soon as the loan agreement has been signed
How to Apply
- Must be at least 18 years old
- Must have a minimum income of $2,000
- Visit the moneylender’s office or in-person consultation
How to Find the Best Money Lender?
All accredited moneylenders are listed in the Ministry of Law in Singapore. So before doing business with any money lender, check whether they’re on the list.
The Registry of Moneylenders is a reliable source of information. Upon downloading their list, you’ll find hundreds of lenders who can provide you with dependable financing solutions.
So before doing business with any money lender, check with the Ministry of Law in Singapore first.
It’s also beneficial to choose a licensed money lender with years of experience in the industry. Experienced lenders are equipped with the skills and knowledge to understand their clients. They can provide the best personal loan package.
Check out the licensed moneylender’s website. More importantly, read what their clients have to say about their services and helpfulness. Take note of any issues raised by disappointed clients. Some of the bad reviews could be correct while others may seem out of place. For example, if the borrower’s request was outrageous.
It’s also a good idea to check reviews from independent financial services websites. Google Reviews is also a great place to read up on feedback. For instance, Raffles Credit, a licensed moneylender since 2010, has over 319 excellent ratings and reviews on Google Review.
How to Build Credit Score
Increasing your credit score isn’t impossible. But you can’t build your credit score overnight. It. requires a disciplined approach. That said, you need to maintain healthy financial habits.
Avoid delayed payments. You might think that it’s okay to pay late as long as late payment fees are also paid. But if you delay payment beyond 30 days, you’ll be categorized as a delinquent account over time.
To avoid this mistake, try to list your payment schedule. If an emergency comes up and you’re unable to pay on time, inform the bank before the due date.
Just because you can use your credit cards for shopping, doesn’t mean you should. You might end up accumulating credit card debt. And as a result, you’ll pay significantly high interest. So, use your credit cards wisely.
Additionally, pay the full amount to avoid paying high interest over time. This will boost your credit score and prevent you from going deep into debt.
This isn’t an exact rule. But some credit experts say you should keep your credit utilization ratio low. A 30-40% is a good guideline to improve your credit score. This means you’re using less of your available credit and you’re keeping your spending in check.
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Avoid Applying for a Large Number of Credit Lines in a Short Period of Time
Applying for several credit lines in a short period can negatively impact your credit score. It gives the impression that you’re facing financial problems. That said, banks might think of you as a high-risk borrower. So if you’re trying to increase your credit score, avoid applying for credit lines for a while.
Should you close a credit account once you paid off the debt? Not necessarily.
Closing an account may save you money in annual fees. But closing the wrong accounts can harm your credit score.
If you want to improve your credit score, it’s best to leave credit accounts open, especially those that are in good standing. Keep it active by making small purchases. And remember to pay the balances in full every month.
Bottom Line
A low credit score can affect your borrowing capacity. But it doesn’t mean you’re helpless. You can start improving your credit score. It can take a few weeks or months, but taking the necessary steps can make a noticeable impact on your score.
Need more loan options? Apply for a loan at Raffles Credit. They offer secure the best personal loan packages with clear and simple terms. Best of all, your loan application will be approved within 30 minutes!
