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How Is Your Credit Score Determined

How is Your Credit Score Determined

If you have ever wondered why the same moneylender in Singapore may extend different interest rate loans to two different parties, then you may find the answer in their credit score. Often overlooked, a credit score determines your credit worthiness and has a direct impact on the risk the lender attaches to your loan. Hence, if you are only given a low approval rating, then you may only qualify for high interest rate loans.

After your initial loan application, a licensed moneylender in Singapore will conduct a credit investigation. As such, you may be wondering what factors into your credit rating, and what can be done to improve it. In this article, we have summarised the key aspects and common mistakes that jeopardises a person’s credit worthiness.

Recency of Loan or Credit Take

All the loans that you obtained, as well as the dates when you got them, will be reflected in your credit information. Some lenders may think that you are over-extending yourself, especially if they can see that you have acquired a loan recently. As such, speculation over your spending habits may lead to them attaching a higher level of risk to your loan, and slapping a higher interest rate on it.

Failure to Make Payments

Do you have a high number of delinquent accounts? If the answer is yes, then maybe it is time to start worrying about them. This will also appear in your records and may lead to a decrease in your credit score.

History of the Account

You may not know this but some of your credit information is actually made available to companies in Singapore. Moneylenders refer to this information to determine whether you can be considered as a good borrower. At this point, it may be unintuitive to new borrowers, but if you do not have a credit record, it may count against you. Without a history of credit card use or prior loans, moneylenders are unable to determine whether you are a good borrower. As such, to get a lower interest loan, you minimally need a credit card and have used it for important purchases.


This refers to the activity in your credit line. The information contained here pertains to the way you utilize credits. It keeps a record of how frequently you borrow money and the amount of time you take to settle these loans. Many of the lenders rely on this information to determine the risk of you defaulting on the loan.

Now that you have seen the importance of your credit score, the next thing to take into consideration is to focus on how to keep it high. You can do these tips:

  • Avoid defaulting in all your loans. This will be shown in your records.
  • Pay your obligations on time, as failure to do so is an indication that you may not be a good borrower.
  • Do not keep on extending the terms for your loans because it is a sign that you are not responsible in complying with the terms of the contract of loan.
  • Only take one loan at a time. As much as possible, do not send numerous applications for a loan.


By following these steps, you stand a better chance in getting a higher credit rating for a personal loan in Singapore.

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