Everyone has a credit report as long as you have a credit account with a bank in Singapore. If you have a loan or holds a credit card, you have a credit score.
Your Bill of Health
Your credit report is extremely important because it dictates your credit health. Basically, what it means is how far you are in your debts and how good you have been in servicing your loans. This report is essential for anyone who wants to borrow you any money. In fact, moneylenders like banks will check your credit report before making the decision on whether they will approve your loan application. Your credit report let them gauge or forecast if you are able to repay the amount you are borrowing.
Knowing your credit score
A credit score is a snapshot of what your credit health is. In Singapore, this is represented as a 4-digit number. This comes in a range between 1000 and 2000. On one side of the spectrum, nearer to 1000 is where the high-risk is. In other words, if your credit score is closer to this side, it means that you are most likely to default your payment. This is the opposite on the other end (closer to 2000).
Custodian of your Credit Report
The CBS or Credit Bureau Singapore is the agency responsible for your credit report. You can actually get your credit report by sending your inquiry online. For a small fee (less than SGD10), you can request for your Credit Report and when it is ready you can collect it from CBS or from SingPost outlets across the island.
How Crucial is my Credit Score?
In most cases, the banks will use your credit score to evaluate you. They need to actually decide, based on your score on the likelihood of you repaying your debt. This is done prior to approving any application. So, whether you are going to get a credit card or buying a property or a car, your credit score will almost be the deciding factor to whether you get the loan or not. As such, you want to have good credit health.
Imagine that you have identified the property you want to buy and you have it all planned out, including how much you have allocated to pay per month. But your credit history is less than favorable which means the bank would not approve your loan application. That would not be very nice.
If you are not a full-time salaried employee in Singapore which means you do not contribute to CPF regularly and intending to apply for the HDB concessionary loan, your CBS Credit Report is extremely crucial. HDB will surely look at your credit health to see if you can service the loan. Only then will the HLE of HDB Loan Eligibility Letter will be issued.
Is a bad credit score the end of the road?
Definitely not! Your credit score would not be perfect for sure. If there are situations when you are unable to make prompt payments, then it would reflect in your report. However, this can be remedied through a ‘clean up’ process. The report actually shows your record over a 12-month period. In other words, you can actually clean up the negativity by making prompt payments during the latest 12-months period. If possible, you should:
- Cancel any credit cards that you are not using and that you do not need
- Don’t get into too many loans and credit cards
- Try to settle your credit card payments in full
- If you cannot make a full settlement, at least ensure your payment is prompt
How about extreme cases?
Late payment is just a minor issue in your credit report as it can be erased after 12 months. There are situations which are more extreme. This is when you have defaulted your payments for too long and if you are already in a debt management program or have gone into bankruptcy. Such details will remain in your record. Even if you have been discharged from your bankruptcy, there will always be a statement that stays there.
Your credit report is individualistic as it reflects you in person. By looking at your report, the reader would know the type of person you are and how you manage your money. This can be good or bad or it can even be extreme. Banks and official credit companies usually take your credit report and judge from there. However, there are situations when you are in need of urgent cash and have a less-than-favorable report. This might be a situation where you would need to borrow from a licensed moneylender which in many ways do not rely on your Credit Report.