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May 24, 2018 By editor

6 Practical Ways to Improve Credit Rating

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A good credit score will result in benefits like lower interest rates and faster approval of loans. If you have a bad credit score, you should make it a priority to improve it. Here are some practical ways to improve your credit score.

Pay your bills on time
Though it may seem obvious, late payment of bills appear in your credit history and affects your credit score. Loan repayments and outstanding credit card payments are two things that you should be careful about. Always make it a point to pay your loan instalments and credit card bills on time every month with no exceptions.

If you pay your mortgage payments late consistently, your credit score will remain affected for several years.

Keep your credit card utilisation ratio low
Your credit card utilisation ratio affects your credit score. According to financial experts, you should keep your credit card usage low- around 20%. For example, if you have a credit card limit of S$10,000, do not carry a balance more than S$2,000. The total available credit and the balance used have a profound effect on individual lines of credit. The lower your credit card utilisation (above 0), the higher your credit score goes. If possible, do not wait for the due date to make payment, and try paying earlier instead.

Make more than minimum payments
People often misunderstand the term “minimum payment due” on credit card statement. Paying the minimum sum will only save late fees. The credit card company still levies interest on the credit card balance. If you continue paying the minimum payment due every month for a long time, the credit card debt will rise significantly and affect your credit rating.  If you have multiple card debts, consider taking a debt consolidation loan from legal money lenders and pay multiple credit card balances at one go.

Do not apply for loans and credit cards more frequently
Many people get calls from credit card companies, and they often cannot resist the temptation of getting a new credit card. If your credit card rating is average or low, you should avoid taking loans frequently from the bank.  Every time you apply for a loan or a credit card, the creditor conducts a credit score check before approving your loan or giving you a credit card. These checks appear on your credit line, and too many credit score inquiries lower your credit rating by few points.  If you want small loans, you can approach legal moneylenders in Singapore who might not check your credit score.

Review your credit report regularly
You are entitled to get a free copy of your credit report every year. You should make it a habit to check your credit report and report any wrong or missing information to credit bureaus.

Pay your credit card debt instead of transferring to another card
Take a loan from authorised money lenders and pay off your credit card debt completely. The interest rate charged by money lenders is likely less than what is charged by your credit card company. It will reduce your debt-to-credit ratio, and full payment of debt will increase your credit rating.

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