When faced with a financial emergency, your best bet for some relief is to turn to a licensed moneylender in Singapore. These institutions provide the funds you need to start a business, pay off a debt, or settle an unexpected bill. They offer a quick and painless application process, and they are often more lenient than banks.
The catch is that you need a good credit score for moneylenders to approve your application, whether it’s for a business, personal, or foreigner loan. In Singapore, a good credit score is your ticket to fast loan approvals, and you have to take care of it as early as today.
The Importance of Your Credit Score
Credit scores are like a grade from financial institutions in the country. They review your accounts and payment history from different banks and calculate a score. The higher your credit score (the highest rating is an AA, which corresponds to a numerical score between 1911 and 2000), the more confident moneylenders are that you will pay them back on time.
There are, however, many spending behaviours that would ruin your credit score — among them the fault of keeping multiples. These “multiples” mistakes might seem harmless, but they are red flags that banks and moneylenders look out for.
Applying for Multiple Loans
It’s alright to apply for several loans, but they should be scattered over a long period. Applying for one loan after another is a sign that your financial circumstances are not as rosy as they used to be. For instance, homebuyers in Singapore might apply for a personal loan to settle the down payment for a home loan, and so on.
Multiple, successive loans indicate a precarious financial situation. It shows you’re a riskier bet for moneylenders, so your credit score will likely dip.
As much as possible, do not apply for multiple small loans that might not be enough to cover everything. Instead, save up for one sizable loan that would cover all the foreseeable expenses. In these cases, foresight of expenses is key.
Having Multiple Open Credit Accounts
Credit accounts are necessary to establish a credit history, but too many open accounts are detrimental to your score. It shows that you owe several institutions money, and this might be a red flag for other moneylenders.
Even if you only owe small amounts on each account, the aggregate could still affect your credit score. For instance, owing small amounts across seven credit cards adds up to a sizable credit. So, keep your credit accounts to a minimum.
Some financial experts say two cards are enough (one as the main card, one for a back up and rewards). For people with larger expenditures, four cards are enough, but you have to take care not to max out each one.
Applying for Multiple Credit Card Applications
Similar to having several loans, applying for several credit cards shows that you might not be in a stable financial situation. This might hurt your credit score; financial institutions are hesitant to lend money to someone who suddenly applies for more than one credit card.
To preserve your credit score, apply for one credit card only. If you’re rejected, wait for a month before applying for another credit card.
You can always find out if your credit score needs to be remedied. Check your score at the Credit Bureau of Singapore. If your score is low, review the mistakes you might have committed and avoid repeating them.
If your credit score is healthy, and you’re planning to start your own business or pay off an emergency bill, turn to Capital Funds Investment, a Ministry of Law-approved and licensed moneylender that helps you achieve financial well-being.
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