Credit Problems? Help yourself out with these tips
Keeping good credit with banks is important, more so if you want your loans to be approved quickly and in full.
Your credit report is a record of your credit payment history compiled from different credit providers. Credit Bureau Singapore (CBS) supplements it with publicly available information such as bankruptcy data.
Is it accurate to say that the record might affect the person's chance of getting a loan in the future?
Many factors come into play in the financial institution’s final decision to grant or deny credit to consumers, and your credit history is one of the tools used by lenders to assess your creditworthiness. Defaults can hurt your creditworthiness and affect your chances of obtaining credit as most lenders will check your credit file to assess your credit worthiness prior to making a decision. A good credit repayment history will thus make it easier for you to obtain credit and to qualify for loans. By reviewing your credit report regularly, it allows you to be aware of any information that is uploaded on your credit file.
CBS would like to encourage consumers to obtain a copy of their personal credit report so that they can better understand the type of information that banks and financial institutions view when they retrieve their credit file.
While different credit providers use different methods for credit assessment, here are some of the factors which lenders look at when assessing credit applications:
1. How affordable is the loan for the applicant given his income and expenses?
2. What assets does the applicant own?
3. How does the consumer manage debt? What are his payment patterns?
4. How many loans and other credit facilities does he have? What is his current total debt?
5. Does he have a record of bankruptcy proceedings, litigation or payment defaults?
Enhancing Credit Reputation:
The factors that are likely to influence the outcome of your credit application include:
- Payment conduct – Payment history is a very important factor in determining your credit score. Since recent history carries more weight than what happened five years ago, getting in the habit of making on-time payments is an incredibly powerful way to improve your credit rating.
- Number of credit facilities owned – Avoid multiple sources of credit. It is more manageable to keep track of 2 credit cards rather than 10.
- Outstanding account balances – Lenders like to see plenty of breathing room between the amount of debt reported on your credit cards & your total credit limits. The more debt you pay off, the wider that gap & the better your credit rating.
- Record of bankruptcy proceedings – Bankruptcy is the most catastrophic impediment to your good credit reputation far worse than delinquencies, loans or collections. Its impact, however, is dependant on how many defaults you made on your credit before you filed.
Generally, an individual can take the following steps to maintain/improve his credit reputation with banks:
- Pay his bills on time and preferably in full, where possible
- Pay down his debts and consider charging less
- Limit the number of credit cards he owns
- Cancel any unused cards
- Not applying for lots of credit at once
- Stay out of bankruptcy if he can
- Get his credit report
- Seek credit counseling
Credit Bureau (Singapore) (CBS) would like to encourage consumers to obtain a copy of their personal credit report so that they can better understand the type of information that banks and financial institutions view when they retrieve their credit file.
A copy of one’s credit report can be obtained via www.creditbureau.com.sg using one’s SingPass ID and password, at any of the 66 SingPost branches, CrimsonLogic Service Bureaus, or from the CBS head office at 2 Shenton Way, #20-02 SGX Centre 1, Singapore 068804. For more information, call the CBS hotline at 6513 8393 or email email@example.com.