A good credit score is one of the most significant factors that have the potential to ensure your prosperity as it enables to grasp new financial opportunities and transform your lifestyle. Availing the loan at the right time is the key to success as lenders provide loans at competitive rates which helps to fulfill the desired financial objectives. Since credit score evaluates your financial stability, lenders always prefer to verify it to ascertain your ability to repay the loan amount.
Whenever you apply for a loan or a credit card, the information is stored in a centralized organization, the Credit Bureau Singapore (CBS). This information can be obtained from the bureau by paying a certain amount where one can information related to recent credit, credit account history, and outstanding credits.
The following financial practices affect your credit score and hamper the ability to procure fast cash loan in Singapore during a rough phase.
Total amount due for repayment: Your credit score gets affected depending on the amount you owe. Hence, the more you owe, credit score gets reduced accordingly. It should also be noted that even if you owe less but your credit accounts are scattered, your credit score gets worsened. To illustrate – if you have credit accounts across two credit cards, one line of credit, and a business loan, your credit score can still be bad.
Applying with multiple lenders for a loan within a short period: It is a wise decision to take loan quotes from multiple private money lenders for selecting the best option as you may get the loan at lower interest rates. However, applying for multiple forms of credit in a shorter period implies that you are facing a crisis, impacting your credit score. Hence, it is advisable to select one particular type of loan and get quotes for a particular product from selected lenders for maintaining a healthy credit score.
Late payments: Since every loan has a payment deadline, it is important to repay the monthly amount on time. You will be considered delinquent if the payment is delayed by more than 30 days and often incur late fees (around $60). The only way to resolve this issue is to make timely repayments since it will improve your credit score over a period of time. In case of delayed payments, the concerned lender should be directly contacted so that an alternative repayment plan can be designed. Even a single missed payment has to be dealt with seriously as such delay impacts your credit score.
Also, while clearing-off your accumulated debt, you tend to focus on clearing small debts first and managing larger debts at a later period. In this process, you may overlook certain important payments, thus, it is essential to consider the deadline of each line of credit before initiating the payment. You should also ensure to pay minimum due amount on all sources of credit for avoiding penalties and additional interest.
Not applying for any credit: Many individuals believe that they are managing their finance well by not applying for any form of credit. This is not true since if you do not apply for availing a loan or use other lines of credit, you will not have any credit history to rely on. Lenders will not be able to evaluate your creditworthiness and it may backfire during emergencies as they may not approve the loan application. By not applying for any types of credit, you may save yourself from paying additional amounts in the form of interest and fees, but you also harm your credit history.
These are some of the key points when considered in the right way, it will help you to boost your credit score and eliminate a few negative practices that affect your credit score.