So, your credit history has been dented by recent late repayments coupled by not paying off balances due in full. You have overextended yourself and are wondering when your credit score will look good again.
How does my credit score affect me?
This is an especially important question if you are planning to buy a property or a car, and need to apply for a mortgage or car loan. 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.
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 programme, taking up a renovation loan for your new place, or taking an education loan for your child.
How do I remedy a bad credit score?
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
- Avoid applying for too many loans in a short period of time
What cannot be remedied?
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.
So what do banks see when I apply for credit or loans?
Intrigued to see what your credit report looks like? Or what your credit score is? You may purchase this online on Credit Bureau for just $6.42.
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