A credit report is essentially a bill of health for your finances. On it, you can find your credit score that basically shows if you’ve been naughty or nice with your credit card bills and other debts.
Money lenders, be it banks or governmental institutions, rely on your credit report to see the likelihood of you repaying your debts to judge if they should lend you or not.
In this article, we will talk about how to get your credit report and reverse bad credit scores.
What is a credit score?
A credit score is a four-digit number based on your past payment history on your loan accounts which ranges between 1000 to 2000. If your credit score is closer to 1000, it means that you have a higher risk of defaulting on a payment. If your score is nearer to 2000, you’re in the pink of financial health, with a low risk of default.
You will be able to obtain a credit report from Credit Bureau Singapore (CBS) that states your credit score by requesting online. When it is ready, you can collect from SingPost branches, Credit Bureau office at Shenton Way, CrimsonLogic Service Bureaus or at CASE. It costs $6.42 (inclusive of GST).
How does my credit score affect me?
Your credit score will be used by banks to assess how likely you are of returning your debts. So if you are planning to buy a property or a car, and need to apply for a mortgage or car loan, you gotta ensure that your credit score looks good.
It can be a real bummer if you have to pass on the property you were eyeing just because your credit history looks terrible and no bank would want to extend a mortgage to you.
Also, for potential HDB owners who want to apply for the HDB concessionary loan, HDB will want to take a look at your CBS credit report if you’re not a full-time employee with regular CPF contributions. They’ll need to assess how likely you will be able to service your loan before they issue you with the HDB loan eligibility letter (HLE).
Your credit score is also important if you are planning to take up any forms of credit or loans, be it applying for a new credit card with a good rebates program, taking up a renovation loan for your new place, or taking an education loan for your child.
Can I remedy a bad credit score and how long does it take?
If you have over-extended yourself and your credit history has been dented by recent late repayments, you might be wondering when your credit score will look good again.
The good news is that it is within your ability to clean up your credit history, as reports from the Credit Bureau shows your track record on promptness of payment over a 12-month period.
This means that you are able to ‘erase’ a bad credit history, marked by late repayments and not meeting minimum repayment sums, by making it a priority to pay your monthly credit card and loan instalments on time for the next 12 months. This will clean up the section of your credit report known as ‘Account Status History’.
Other tips to up your credit score include:
- Not applying for too many credit cards
- Cancelling cards that you don’t use
- Paying off credit card bills promptly and in full
- Avoid applying for too many loans in a short period of time
What cannot be remedied in your credit report?
Alas, if your credit history problems go deeper than late repayments, into situations like default, bankruptcy proceedings and debt management programs, these will always be reflected in your credit report. No matter how many years have passed since you have obtained a clean bill of financial health.
These details will be stated plainly as a statistic on the top right section of your credit report, under ‘Summary’. Details of whether the default is outstanding, whether debt management programs are in progress or whether you have been discharged from bankruptcy are available further down your credit report.
Information on the specific codes that you are given when you make payments on your bills can be found at the provided links (to the Credit Bureau of Singapore’s site), but these are the codes you (or your banker) definitely do not want to see:
“W” code: Coded as defaulted by Member, which is basically the worse code you could see. This does not get reset and will scar your credit score.
“R” or “S” codes: Coded as the bank has closed off the account/credit facility and that a settlement or restructuring of the outstanding has occurred.
“H” code: Involuntary closure of the account with outstanding balance.
Do you have any questions about credit scores and credit reports? Ask below in the comments!