There are a lot of people struggling with bad credit score today, If you are having this problem, know that you’re not alone. Many people have the same struggle as you due to job loss, a medical emergency, or unexpected expenses. In many ways, a low credit score can make it very hard for you to secure a loan from banks.

That said, it doesn’t automatically equate to having no options. When you understand your options and take the right steps, you can improve your chances of getting the financial support you need to get back on track.

About Bad Credit in Singapore

Bad Credit in Singapore

Learning about credit scores and what they mean is super important no matter which stage you are in your life. In Singapore, the credit scores are calculated by the Credit Bureau Singapore (CBS), and they range from 1,000 to 2,000.

When a person has a higher credit score, it means that they have a lower risk of defaulting on credit payments. Alternatively, a lower score suggests a higher risk.

Here’s a table below that provides a breakdown of the credit score ranges and their corresponding risk grades:

Score Range Risk Grade Probability of Default
1911-2000 AA < 0.27%
1844-1910 BB 0.27% to 0.67%
1825-1843 CC 0.67% to 0.88%
1813-1824 DD 0.88% to 1.03%
1782-1812 EE 1.03% to 1.58%
1755-1781 FF 1.58% to 2.28%
1724-1754 GG 2.28% to 3.48%
1000-1723 HH > 3.48%

What Causes Bad Credit?

What Causes Bad Credit

There are quite a lot of factors that can contribute to a poor credit score in Singapore. Here are some of them:

Late Payments

Did you know that when you miss a payment or make a payment more than 30 days late, it impacts your credit score negatively? When you always have late payments on your bills like credit cards or loans, it signals to lenders that you are having trouble managing your finances.


Bankruptcy records are retained for five years from the date of discharge. Many people cannot get loans when this happens to them because lenders view bankruptcy as an obvious and significant risk factor.

High Credit Card Utilisation

Credit utilisation is the percentage of your available credit limit that you are currently using. Let’s put it into perspective – if a person has a credit card utilisation over 30%, that’s not a good sign.

Loan Defaults

Not making payments as agreed on the contract can also severely damage credit score. Default records with the status of Outstanding, Partial Payment, or Sold Off will be displayed indefinitely on the credit report.

Too Many Credit Inquiries

What happens when you have too many enquiries in a short time, you might ask? It signals that you are taking on more debt than you can handle. This is why it’s a red flag.

Lack of Credit History

Although this is not necessarily a cause of bad credit, having a limited or non-existent credit history can make it challenging to obtain credit. Sounds counterproductive, right? But that’s a reality since loan providers rely on your past credit behaviour to assess your creditworthiness.

Licensed Moneylenders Are A Great Alternative for Singaporeans with Bad Credit

Accessible to Many Borrowers

Licensed moneylenders are more inclusive and accessible compared to banks and these institutions are willing to work with borrowers from different income groups, even those with lower incomes or less-than-perfect credit scores.

Faster Approval Process

Banks are notorious for their long and meticulous procedures, but licensed moneylenders can often provide approval within hours or even minutes. This fast time is particularly great for those who need funds urgently. You just need to apply online, go to the office of the money lender, and you’re all set.

Flexible Loan Terms and Customised Packages

When you apply for a loan with a money lender, prepare to see many loan types catered to different personal and business needs like personal loans, renovation loans, wedding loans, and debt consolidation loans.

Minimal Documentation Requirements

Nobody wants to spend days compiling information since this is extremely stressful. While banks may demand extensive paperwork and proof of income, licensed moneylenders just ask for key documents. This makes the application process more straightforward.

Loan Amounts Based on Monthly Income

Best licensed money lenders in Singapore can offer loan amounts of up to six times the borrower’s monthly income, depending on their annual salary. This allows Singaporeans to access substantial funds when needed, even if they don’t meet the stringent income requirements set by banks.

Tips to Improve Your Credit Score in Singapore

These tips below will gradually rebuild your credit reputation and increase your chances of accessing better financial products in the future.

Make Timely Payments

Consider setting up automatic payments or reminders to ensure you never miss a due date. Timely payments demonstrate to lenders that you are a responsible borrower.

Keep Credit Utilisation Low

Your credit utilisation ratio, which is the amount of credit you’re using compared to your credit limit, plays a significant role in your credit score. Aim to keep your credit utilisation below 30% to show that you can manage your credit responsibly.

Limit Credit Applications

Be selective about the credit products you apply for and space out your applications over time.

Maintain a Mix of Credit

Having a diverse mix of credit types, such as credit cards, personal loans, and instalment plans, can positively influence your credit score. This demonstrates your ability to manage different types of credit responsibly.

Check Your Credit Report Regularly

Regularly reviewing your credit report allows you to identify any errors or inaccuracies that may be negatively affecting your credit score. You can obtain a copy of your credit report from the Credit Bureau Singapore (CBS) and dispute any incorrect information with the relevant financial institution.

Use Credit Cards Strategically

If you have credit cards, use them strategically to your advantage. Making small purchases and paying off the balance in full each month can help you build a positive payment history without incurring interest charges.

Consider a Secured Credit Card

If you have a limited or damaged credit history, a secured credit card can be a helpful tool to rebuild your credit score. Secured credit cards require a cash deposit that serves as collateral, reducing the risk for the lender.

The Bottom Line

Applying for personal loans can be a hurdle, especially for Singaporeans with bad credit. However, you can still secure a personal loan that meets your unique needs. When searching for the best personal loan, Lender SG can be an invaluable resource in helping you compare offers from various licensed moneylenders and guiding you through the application process.

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