We live in a capitalist world with consumption being a key trait of our lives. In a country like Singapore, where you have some of the world’s most advanced technologies and services, the cost of living is also on the higher end. In such a scenario, instant cash loans are often considered to be a major support system for people to manage their needs and finances. However, to determine the eligibility for the loan, a good credit score has emerged as one of the most important factors to avail an urgent loan in Singapore.
A good credit score enables one to be assured of a loan approval upon applying for short-term cash loans and it is digital and convenient. However, one of the concerns with credit card debt and other instant cash loans is you must not forget that each successful swipe of the credit card or each loan amount credited to your account is eventually going to burden your finances.
If you are not careful enough, this habit of taking instant cash loans and using credit cards for all needs can make an adverse impact on your credit score and might even eventually make you become ineligible for loans in the future. In case you have already fallen into a low credit score scenario, it is not that you should panic.
Here are some tips for you which will help you understand how a credit score works and how you can improve it over a period of time.
If you have a B credit score then instead of worrying, you need to steadily follow the steps mentioned below. Through adherence to these steps, you will be able to improve your credit score and reach AA or close to it in a year or two. That will also enable you to take major loans in the future.
1. Repay your loans on time – You might think that if you miss a monthly payment on your existing loans or credit card payments then the only cost you will have to pay is the penalty amount or the additional interest. However, you couldn’t be more wrong.
Missing the payment of your Singapore loan even by a couple of days can have an impact on your credit score. By the time you get a late payment reminder, it might have already brought your credit score down a notch. In fact, even if the debtor waives off the late payment fees, the negative impact on your credit will linger on. For the credit cards, even if you don’t pay in full, make sure to make timely payments of the minimum amount due on each statement.
However, the best option will always be to go for the full payments as it will also reduce your interest payments. In the worst-case scenario when you know you are unlikely to make the payments or pay an EMI on time for your short term cash loans, you must inform your bank beforehand about the delay or speak to a credit counsellor. Sometimes banks help people work out a debt restructuring plan which is less damaging to the credit rating.
2. Do not apply for multiple loans simultaneously – Making multiple loan applications or queries in a short duration (a month) can go against you even if you don’t actually take any of these loans. The reason is that such behaviour indicates either financial problems, loss of job or heavy debt burden. Even if you are thinking of contacting multiple creditors to compare your Singapore loan options and get the lowest interest rates for your short term cash loans, you need to opt for an online comparison tool instead of making so many enquiries.
3. Reduce existing loans and credits – At any given point in time, you must not have more than 4-5 credit lines or loans running. For instance, you might be paying the personal loans, car loan EMIs, along with a loan for some appliances and credit card bills. Such multiple credits will not only bring down your credit rating but also impact your ability to keep a track of so many billing cycles and pay each on time. Instead of getting multiple loans, you may consider loan modifications on your existing loan agreements.
If you have credit cards that you don’t use, close them off. Consolidate multiple small loans into a single bigger loan. This would also save on interest repayments and most major creditors offer such debt consolidation loans. These are some of the ways through which you can reduce your debt burden, streamline your existing credit and above all, improve your credit rating to procure an urgent loan in Singapore. All the best!