Have you ever been denied a credit card limit increase or loan without understanding why it occurred?
If it has happened to you, it is likely that something is up with your credit rating that you are not aware of. Moneylenders, banks, and other financial institutions consider a prospective borrower’s trustworthiness based on their credit file before they consider lending funds to you. If you regularly pay your dues and other credit, it will be easier for you to get the personal loan or credit limit increase you requested. Any other credit-related data would also be included in your credit report.
Regularly checking your credit report would also give you an idea if your data was used in a fraudulent manner to get credit.
In Singapore, the Credit Bureau (Singapore) Pte Ltd (CBS) is the country’s main credit bureau which handles credit-related information of all of the country’s banks and registered financial institutions. The information is then consolidated to provide a comprehensive risk profile of a particular customer to all credit providers. The profile would then help the credit providers decide if they should lend to the customer.
Credit Report 101
A credit report is a profile of a specific customer that reflects their credit history from different credit providers. The report would show how well you pay or how often you are late for repayments, as well as how much money you have borrowed throughout the years.
The report would then give moneylenders, credit card issuers or banks an idea of your financial capacity and determine if they should lend you money through a personal loan, issue a new credit card for you or increase your credit card’s limit.
A credit score is a set of codes lenders use to indicate how likely a person would be able to pay what they owe and the possibility of them failing and defaulting what they borrowed. It is also a review of a person’s risk as a potential borrower or credit applicant.
The CBS Credit Score uses a four-digit number to rate how well you pay on your loans. The four-digit number ranges from 1000 to 2000 with people with a 1000 score are highly likely to default on payments. Those with a 2000 score have a low chance of being a delinquent on their payments.
Of course, credit scores aren’t the only ones being considered when it comes to loan or credit applications.
Moneylenders and financial institutions would also look into your annual income, employment history, active credit, and bankruptcy information to see if you can pay your credit.
CBS doesn’t blacklist or influence the lending approval decision of your chosen moneylender or credit provider because it will depend on the lender’s jurisdiction and policies. CBS will only provide them with all the information regarding the credit applied for by applicants to help them decide.
What Can Influence Your Credit Score?
- Utilization Pattern
This aspect is about the total amount of money you borrowed or used on your loan or credit.
- New Credit or Loan
This factor indicates if you have a new credit line active. If you have an existing one on top of your new credit line, lenders may say you are stressing your finances if the new credit line was just opened recently. If you plan to open another credit, like a personal loan, lenders may say you should not open another one immediately.
- Account Delinquency Data
This aspect indicates your late payments on your loans or other credit programs if you have some reported.
- Credit Account History
This part indicates the client’s payments history, open/closed/defaulted accounts, and other related information. If you have been borrowing for a long time and pay regularly, it can help improve your credit rank.
A credit account history also details your 12 months history for easier score computation.
- Available Credit
This indicates the credit accounts you currently have active, like active loans or credit cards.
- Enquiry Activity
This factor indicates the total number of enquiries for new applications were seen in your report. When a bank, moneylender or credit provider takes out your record for a new loan application or credit application, an enquiry about your status is listed on your profile. If you have a lot of enquiries recorded, it will tell lenders that you are applying to borrow a lot of money despite your capacity.
How to Request Your Credit Report?
If you want to know your current credit status, you can request your credit report through the website or office of the Credit Bureau Singapore or visit one of the 62 SingPost branches in the country. You can also request for it through the branches of CASE or CrimsonLogic Service Bureau.
Each credit report is worth $6 and will include GST charges.
You can also use CBS’s ‘My Credit Monitor’ service as a free version of your credit report. The service would notify you of key changes on your credit record.
If you have applied for the new credit monitoring service of any bank or financial institutions affiliated with CBS from April 1, 2016, you can get a free credit report. If you applied for a credit application, you will receive a letter which notifies you about your application. Once you receive this letter, you will be able to get your credit report for free within 30 days. CBS would also extend this free report if they go to CBS offices in person or seek the report through the website.
If a member does not inquire about your status when the individual applies for a new credit program, they could visit CBS directly to get a copy of their report. A letter would also be included for the member the individual applies for a new credit program.
If a member does not enquire and a borrower was rejected without being notified, you must contact the member you applied at.
Before you apply for a new credit card or a personal loan, it is ideal if you check if you have high chances of getting approved by checking your credit history first through your credit record. If you get your credit report first, you will have a better idea of your credit status and if you have problems, you can seek help to remedy it.
So, do your research first before applying for a loan and other credit services to reduce the stress of failed applications!