Hack Your Credit Score In Your CBS Report


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Like it or not, credit scores play a major role in your financial life, especially if you are a business towkay, and not just when it comes to loans. Some companies may not even hire someone with a low score. Credit scores can even determine what cell phone plan you get and the deposit amount for utilities. And of course, a bad credit score can cost you tens of thousands of dollars in interest on home, personal, and business loans.


There are a lot of misconceptions about credit scores, some of which can ultimately hurt your score. Since this number is so vital, it’s important that everyone fully understands how credit scores work.


Checking Your Own Record Will Hurt Your Score?


Checking your credit report on your own is known as Soft Enquiry, and it will only hurt your pocket as you have to pay a small fee, and will not hurt your credit score!

It is also advisable to check your credit score every 3-4 months and track your score.

Checking it regularly will let you take early actions to build the required score as well as help detect errors and correct them.


"Failing to plan is like planning to fail".


My Income Has Increased. My Credit Score Will Increase Higher?


Many people have thought that their credit score will automatically improve when they have a higher income. That is totally not true!

Your job title and income have no direct effect on your credit score. Scores are based only on the information found in your credit report. Your report includes a lot of information about your use of credit and your management of debt. But, it doesn't include your income. In fact, it may not even indicate whether you have a job (nor will it tell you to get off the couch and get one). That said, your employment situation can affect your score indirectly, in terms of your ability to pay your debts. And when you apply for credit, lenders will probably ask about your income by checking on your CPF or your Notice Of Assessment.


A credit score is linked with your "behavior with credit", and not linked to your income, just to remember that.

Despite your very high income, your credit score may still remain low if your repayment record is bad, have a high credit utilization, as well as having frequent applications for loans, balance transfers, and credit cards.


Settling Credit Account Helps In Improving Credit Score


Settling your credit card/ loan is totally different from closing them. Be very sure of that!

Closure of your credit card/ loan means deactivating them after you have done a full repayment and there are no outstanding amounts due on them.

Settling of credit card/ loan means that you are unable to pay the outstanding amount, so the bank will extend an option to go for either a one-time settlement or a restructuring payment scheme which may cause a certain amount to be written off. The bank will then inform the Credit Bureau that it is a settled account and the record will be there for a very long period of time, which will affect all future loans and credit card applications.


With that, banks will then consider you as a risky borrower because you have caused loss to the bank in the past and they will become very hesitant in giving you a new loan in the future.

Therefore settling your loan will cause more harm than good to your credit scoring.


I have never taken a credit card before. I have a perfect credit score then!


Ahemmmm!!! Many assume if you have no loan or credit account with the bank, indefinitely there are going to approve any loans or cards to you immediately. You are so wrong in that sense!

You must have an active credit account with the bank, to display a good repayment track for them to show a positive sign. With that in mind, if you have credit card usage and loans, and you meet commitments on time without fail, then you are considered a less risky customer. You will get easier credit approval with better offers and preferential rates.

To sum it all up, no credit history with any of the banks means no data for them to analyze. Therefore they may refrain from approving any credit to you when you need it the most.


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Be A Minimalist And Close All Old Credit Cards


You may have applied for too many credit cards before from pesky roadshows or online promotions. The usual reasons why credit cards are closed are to save on the annual fees or no use for them at all.

It will not be advisable to close that card from the bank if you do not have a long credit history with the bank, do not have other credit products with that bank, or have a very low credit score currently.

In general, credit scoring models don't measure risk by how much credit you have available, but rather by how much of that credit you're using — a ratio known as "credit utilization". When you close an unused account, you reduce your total available credit, so your credit utilization goes up


So before your itchy fingers are activated to close the cards, do consider these factors.


You must make sure you have a good mix of credit products, which shows that you have the ability to manage different types of credit. So if you do not have it currently, it will be better to just continue with the account.

That is because, in the eyes of banks, they always look for those with very long credit history, with a good payment track record, then they will approve a loan with better credit terms.


I Am A Good Law Abiding Citizen. My Credit Score Is Dependent On That


Credit scores are designed to evaluate how big of a risk it would be to lend you money. This is to protect the bank from lending to you. That's it. If your score is low, it's because your credit history suggests that there's a higher risk that you'll default on a debt. It doesn't mean anyone thinks you're a bad person. Good, honest people can have low scores (and yes, truly awful people can have high scores). What you can do is work to generate a positive credit record: pay bills on time, reduce balances and apply for credit only when you need it.


Living within your means is always important, but you should be willing to rethink what you know. Because when it comes to debt, credit reports, and credit scores, conventional wisdom is peppered with myths, misunderstandings, and misrepresentations. Credit is a tool. Like any tool, it's neither good nor bad in itself. Make sure when you apply for your next credit card or loan, it is not "forced" by someone or something out there.


To know more about applying for a business loan in Singapore, do contact us and we will provide you with the best advice possible.