You may be reading various blogs or online content saying that credit scores are vital when you plan to borrow a personal loan or other types of loan, especially from banks. And, also you might be in the middle ion searching and found several tips on how to increase your credit scores. But, before anything else, it is essential to know what your credit score is and how you can check it.
In this article, we will also highlight why it is vital to check your credit score. In the end, you’ll find that that this will not only serve as criteria when getting a loan, but it carries a range of advantages.
What is a credit score?
Credit Bureau Singapore (CBS) is the organisation that collects and aggregates data from all participants, from banks to credit card companies to finance companies, to create a complete credit risk profile for borrowers and the one that provides the credit score of a borrower.
The CBS defines credit score as the number used by lenders that serve as an indicator of a borrower’s likeliness to repaying his debt or probability of default repayment. It serves as an independent assessment of the applicant’s credit risk.
What’s a CBS’s Credit Score?
- CBS’s credit score in Singapore is a four-digit number calculated based on past payments on loan accounts.
- The credit score ranges from 1000 to 2000. The credit score of 1000 is the lowest range. It has the highest probability of defaulting to repay a loan. At the same time, 2000 is the highest range with the most excellent chances of repaying and the lowest chance of being a delinquent borrower.
- It is one of the factors considered during your loan or credit application process. Lenders also consider other factors such as your annual salary, years of tenure, number of credit facilities.
- CBS also highlighted that they do not “blacklist” or play any role in lending approval decisions. It is a decision made by the lenders and their lending policies. Instead, they provide specific credit-related information on consumers who have loans or credit facilities to lenders.
CBS’ Credit Score Range
Source: CBS – Description of Credit Score
The highest credit score risk grade possible is AA. Grades of B and C signify late payments or delinquency, while grades D and lower indicate defaults.
For credit score calculation purposes, your account repayment history shows a rolling 12-month basis. It is possible to increase your credit score in the future.
What is a good credit score in Singapore?
With the given data above, you may wonder what a good credit score is in Singapore. Based on the credit score table above, a good credit score must be nearer to 2000. This scoring range has a lower probability of defaulting a repayment.
Why is it important to have a good credit score?
For loans over S$500, banks or financial institutions will use a credit score to determine how much they can lend you. Also, banks in Singapore do not change the interest rates based on credit scores, unlike other countries.
Your credit score is also necessary if you plan to apply for any credit or loan, such as a new credit card or renovation.
Having a good credit score is also essential when you are applying for an HDB loan. HDB will need to request a credit report from Credit Bureau Singapore if you are not a full-time employee who regularly contributes to CPF. Before they can issue the HDB loan eligibility letter (HLE), they will need to determine if you can repay your loan.
How to check credit score in Singapore?
To check your credit score in Singapore, you need to get your credit report (here’s an example of a credit report). You can purchase it online. You may also request a copy at any SingPost branches, the Credit Bureau office, or CrimsonLogic Service Bureaus.
How much does it cost for a credit report?
- You can purchase it at S$ 6.42 (inclusive of GST).
- If you buy multiple delivery modes, you’ll need to pay an extra fee of S$2 for the service.
- Also, if you opt for express 2-hours service at SingPost branches, you’ll need to pay an administrative fee of S$17.12.
How can you pay for your credit report?
Among the accepted modes of payment are the following:
- For payments made at the office of Credit Bureau Singapore, you can pay using cash, eNets, Visa, and Mastercard.
- And, for online cost, you can pay through eNets, Visa, and Mastercard
How do I get my free credit report in Singapore?
You can also get it free of charge if you apply for a new credit card or loan with any CBS member.
The provider will send you a notification informing you that your application was approved or denied. In either case, you will receive a message from the provider informing you of your application’s approval or rejection. You will receive a letter with instructions on how to get a free credit report by CBS within 30 days.
Who can access your credit report in Singapore?
Only the Credit Bureau (Singapore), and other MAS-approved institutions that are part of the Credit Bureau (Singapore), have the only access to consumer’s credit reports. This access is only to assess the creditworthiness of consumers. Any further disclosures to anyone else are prohibited.
To identify themselves, all authorised personnel (both members and Bureau) have a unique ID and password to access the Bureau’s database. Unauthorised personnel cannot access the Bureau’s database. Access to the Bureau’s databases is under monitoring.
In addition, the Credit Bureau Singapore states that it cannot provide or share your information to other parties such as direct marketing companies and even to international credit providers.
How CBS ensures the safety of your information?
Aside from not allowing non-members access, the Credit Bureau applies strict security measures. Its database undergoes regular audit and testing by leading IT service companies. Also, providing you a copy of your credit report allows you to make corrections to inaccurate data.
Why checking your credit score and credit report is important in Singapore?
Seeing the actual numbers of your credit scores are not only for the sake of getting a loan. It is an important document that contains your overall credit payment history from various lenders.
And below are the main advantages of knowing your credit score and credit report.
- Know the credit side of your financial health. By knowing your credit score, you know your financial health, which is essential in making financial decisions such as getting a loan. A good credit score such as having an AA credit rating allows you to access credit facilities easily.
- Awareness of information uploaded in your credit file. A regular review of your credit report makes you aware of any information included in your credit file.
- Protecting your details from fraudulent use. Checking your credit report allows you to protect your personal information from fraudulent use to get credit.
CBS’ My Credit Monitor service scans your credit report every day and sends you an email notification if there are any significant changes. It is essential to detect ID theft early so that you can minimise the damage it can do to your credit.
You may subscribe to the “My Credit Monitor” service at any Singapore Post branch or visit the CBS office to apply.
- Quick and More Objective lending decisions. Credit providers can also use your credit report for fast and more objective lending decisions. CBS provides credit data to its members (credit providers) under authorised conditions. It helps them determine if the applicant for credit has high or low credit risk.
- Competitive Credit Marketplace. It will result in a more competitive credit market among credit providers. Responsible customers will expect better and faster services from credit providers once the Bureau is in place.
What are the factors that affect credit score?
Below are the factors that affect credit score based on Credit Bureau Singapore.
- Utilisation Pattern – This is the credit amount that individuals owe or use on their accounts.
- Recent Credit – If you book credit facilities in a short time, lenders may think you are over-extending. Consumers should use new credit responsibly.
- Account Delinquency Data – Credit score will be affected if you have late payments (delinquent) on your loans.
- Credit History – If a consumer has a long credit history, they are more likely to borrow money than someone with a shorter credit history. You can improve your credit rating if you have a track record of making prompt payments. Score calculation uses 12 months of account repayment behavior (closed and defaulted are also included), as shown under your credit report’s Account Status History section.
- Available Credit – This is the number of credit accounts that are open or active.
- Enquiry Activity – This is the number of applications you have received from your credit.
An enquiry is made on your credit file every time a potential bank/financial establishment pulls your credit reports in response to a loan application. A lot of inquiries in your credit file can indicate to lenders that your intent is to take on more debt. Limit the number of credit cards and loan facilities you apply for to keep your inquiries to a minimum. Your score will not be affected by your review of existing loan facilities.
If you are applying for a bank loan or from a financial institution, don’t forget to read the tips on how to improve your credit score.
Don’t worry if you’ve got rejected from the bank when applying for a personal loan or any loan. At MoneyIQ, you have a chance to find the perfect lender that can help with your financial goals. Check the list of moneylenders in Singapore.
