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5 Ways To Improve Your Credit Score

5 Ways To Improve Your Credit Score

Whether you pursue a finance career or not, maintaining a good credit score is important in Singapore. Your credit standing may either open or close doors for you. Living in a developed country, it is almost impossible that one does not incur financial obligations. Thus, keeping a good credit standing is always important.

In Singapore, an individual’s credit score plays an important role in his or her financial life. A credit score is a four-digit number assessed based on someone’s past payment history on loan accounts. The score ranges from 1000 to 2000.

Individuals who have credit scores closer to 1000 reflect that they are at a higher risk of default. While those who have scored nearer to 2000 reflect that they are at low risk of default. Your credit score will likely determine your credibility in terms of financial obligation.

How Is a Credit Score Calculated?

In Singapore, your credit score is computed based on a proprietary algorithm that tracks your use of credit. The Credit Bureau Singapore (CBS) assesses and issues a credit report of any Singaporean. Such credit reports may be applied after paying a fee of $6.

Risk grades determine credit scores. The highest possible risk grade is AA. If you are given either Grades B or C, it means that there are delinquency or late payments. Grades of D or lower are given to those who defaulted, such as when a bank was forced to write off the loan.

Aside from credit grades, there are also “ungraded” credit scores. This happens when you have no history of using loans or credit cards. The usual score that may be given to you is “Cx.” If a person is declared bankrupt or facing litigation, such will be reflected in their credit score.

How Credit Score Affects the Cost of Borrowing?

Banks use credit scores to assess the ability of the individual to repay debts. If you plan to get a property loan to buy property such as a car or a new home, or a new credit card, you have to make sure that you have an excellent credit score. There is a high possibility that your loan will be disapproved if you have a poor credit history.

For those wishing to apply for the concessionary loan of the Housing and Development Board (HBD) of Singapore, it is important to secure a credit report because HDB will look at your credit score if you are not a full-time employee with regular CPF contribution.

Your credit score is certainly important if you aim to apply for any form of credit or loan like a new credit card or education loan. Banks and other financial institutions depend on the applicant’s credit score on whether the loan will be approved or not.

How to Improve Your Credit Score?

If you have a bad credit history, all is not lost. There are different ways to improve your credit score. Below are five actions that may help you improve your credit score. You may do the following:

  • Always repay loans on time
  • limit the number of open credit facilities
  • Avoid multiple hard inquiries
  • Keep loan inquiries to a minimum
  • Settle in full any short-term loans

1. Always Repay Loans on Time

It is a cardinal rule that you repay your loans on time. Your credit score drops if you receive a second or third letter reminding you of your payment. Even if the bank waives late payment fines, this scenario will occur.

In cases of credit card bills, payment of the minimum sum before the billing cycle ends would be sufficient. However, we advise that your bills must be paid in full every month to save on interest repayments. If you have loans such as mortgages or home loans, or other installments loans, it is always prudent to inform your bank ahead of time if you think you cannot make repayment on the due date. It may be possible that the bank will provide for a debt restructuring to accommodate your situation.

2. Limit the Number of Open Credit Facilities

It is always safe to maintain only a few open credit facilities (personal lines of credit, credit cards, personal loans, etc.). The most number of credit lines will be four to five credit facilities. Any number higher than that is highly discouraged. In this way, you can monitor the billing cycles of your loan obligations and avoid missing them.

If you have any credit cards no longer in use, you advise that you close them off to save the annual fee. Finding a credit line with a lower interest rate is also advisable. Maintain only those that are necessary and with a low-interest rate.

3. Avoid Multiple Hard Inquiries

It is always advisable to spread out your loan applications. Making four or five applications within a short span is frowned upon because you are seen as “credit hungry.” Financial institutions see this behavior as common to someone who has just been retrenched or is in debt.

We recommend that you don’t apply for multiple loans and inquiries all at once. It is best to weigh all loans available in the market before applying for one. In deciding, always consider, among others, one with low-interest rates.

4. Keep Loan Application Inquiries to a Minimum

Having multiple loans all at once makes it hard for you to keep track of due payments. A single default on loan will reflect on your credit history. Worse, even a single default will make it hard to get a home loan, credit card, or line of credit.

To avoid this situation, we recommend that you keep loan application inquiries to a minimum. It is also easier to maintain an excellent credit standing if your loan application inquiries to a minimum.

5. Settle in Full Any Short-Term Loans

Settling in full any short-term or small loans ($1,000 or less) aids in repairing a bad credit grade. If you make faithful, consistent, and on-time payments of short-term loans over time, the bureau will consider this and give you a better credit grade. This is considered the easiest way to improve a damaged credit score.

If you intend to apply for major loans such as home loans and have a credit grade of B or under, then do this action for at least a year or two before your application. As mentioned, faithful compliance with short-term loan obligations will make it possible for the credit bureau to give you the coveted AA rating.

Other Option

Sometimes it is just tough to make repayments of all your loans. With bad credit history, it is almost impossible to be granted loans. Fortunately, there are money lenders in Singapore who do not consider your credit standing before granting loans.

365 Credit Solutions personal loans to individuals even with bad credit history. Credit grade is only considered in determining the loan amount and interest rates. Thus, if you have pending debts and lack funds, consider obtaining a personal loan from 365 Credit Solutions to avoid defaulting on your loan obligation.

If you are overwhelmed with your credit card bills, car loan, home loan, and other financial obligations, look for a bank that will help you settle your debts. Defaults lower your credit. Thus, as soon as you feel like you can comply with your financial obligations, look for a financial institution to help you.

How Long Does it Take to Remedy a Bad Credit?

If you are worried that bad credit is hard to change, we assure you that it will not take so much time before you can repair this. Your credit report can improve in a span of one year, depending on your behavior. It is important to note that default, bankruptcy proceedings, and debt management programs will always be reflected in your credit report.

Credit Bureau Singapore publishes your credit report reflecting the track record of your payment over a 12-month period. If you wish to replace your bad credit rating, pay your monthly credit card bills and loan installments on time for the next 12 months. This will clean up the history of late repayments in your credit report.


In this article, we illustrated how important a credit score in Singapore is. Banks and other financial institutions rely on credit grades before they grant financial aids. There is a different level of confidence reposed to people with impressive credit reports. Thus, it is not accurate to say that only those who intend to have a finance career should be conscious of their credit standing.

A credit report is not a mere piece of paper. It reflects your trustworthiness and integrity. It also shows that you are a good example of a diligent and responsible borrower.

The next time you consider credit applications, be mindful of the factors discussed in this article. There is nothing wrong with applying for credit cards and other financial obligations. The key is to be responsible and diligent.

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