What is a Credit Score?
A credit score is a 4-digit number (usually between 1000 – 2000) that shows how risky you are as a borrower. The lower the credit scores, represents higher the credit risk to lenders and vice versa. The labeling of the score bands ranges from AA (best) to HH (highest risk).
Calculated based on your credit history, like:
● Repayment history with participating FIs or banks
● How much debt do you owe
● How long you’ve had credit
● Types of credit you use (credit cards, loans, etc.)
Recent credit applications can hurt your credit score. If you apply for many new accounts quickly, it can have a bigger negative effect.
● Public records such as bankruptcy information
The most common credit models are FICO and VantageScore. However, the Singapore credit bureau has its own scoring model. This model is made just for Singapore’s financial environment.
Why Your Credit Score Matters for Mortgage Loans
When you apply for a mortgage loan, lenders use your credit score to:
● Approve or deny your mortgage application
Bottom Line:
● Lower scores could result in stricter requirements
Credit scores are important as they highlight your creditworthiness. A lower score may mean you could default. This might lead the bank to set stricter rules or deny your loan application.
Tips to Boost Your Credit Score (Before Applying for a Mortgage)
1. Pay Your Bills On Time — Always
- Payment history is critical. Even one missed payment can lower your credit score.
2. Don’t Open New Credit Accounts Quickly
Applying for many new credit accounts in a short time can suggest that you need more credit because of high spending. Such multiple new credit applications also lead to lower credit scores.
3. Keep Older Credit Accounts Open
- Length of credit history matters (longer = better).
- Don’t close your oldest credit card, even if you don’t use it much.
4. Diversify Your Credit Mix
- Having a mix (credit cards, car loan, personal loan, etc.) can help slightly.
- But don’t take loans just to improve your mix — it’s a small factor.
5. Fix Any Errors on Your Credit Report
- You can either purchase your own credit bureau report @ Credit Bureau Singapore or
- Get free reports within 30 days after applying for a credit facility with the bank.
- Dispute any mistakes (wrong accounts, incorrect late payments, etc.).
6. Ask for a Credit Limit Increase
When you successfully increase your credit limit on a credit card:
- Your total available credit goes up.
If you keep spending the same way, your credit utilization rate will go down. This rate shows how much credit you use compared to your available credit.
- Lower utilization = higher score boost over time.
In Singapore’s CBS scoring model, credit utilization is a key factor:
- Using less than 30% of your available credit is seen as good.
- Using under 10% is considered excellent.
Quick Timeline: How Long Changes Take
| Action | Time to See Impact |
| Pay off credit cards | 1-2 months |
| Dispute and fix errors | 1-3 months |
| Establish good payment history | up to 12 months |
| Rebuild after late payments or collections | up to 12 months |
If you want to know more about credit ratings in Singapore, consult an experienced Mortgage Specialist at IQrate.
It could be super useful before you commit to any purchase of property! 🚀