Here’s Why You Need To Have Good Credit Score

Here’s Why You Need To Have Good Credit Score

Credit score is an integral part of our everyday lives now. From credit cards, auto loans to mortgages, credit has not only brought us convenience, but also helped us in achieving many financial goals such as owning that dream house or car.

It is important for you to build and keep a good credit score in your financial life. A credit score is a number that indicates how likely an individual is to repay his debt.

It is a major consideration used by banks and lenders to determine if they would approve your credit or loan application. Having a good credit score will make it easier for you to obtain credit and qualify for loans.

Many may think that it is tough to keep up with a good credit score, but it is actually quite easy if you know what to do, or not to do.

Here are four effective habits of people with good credit. You can start building yours too before it is too late.

Check Credit Score often

Image from CNN Money

1. Reviewing credit report regularly

Your credit report shows a record of your credit payment history compiled from different credit providers, along with your credit score.

By reviewing your credit report regularly, you will know where your credit rating stands and work towards building or improving your credit score effectively if there is any gap.

At present, you obtain your credit report from Credit Bureau Singapore(CBS) at S$6.42 per copy. CBS credit score is a four-digit number ranging from 1,000 to 2,000.

This score is derived from your past payment history on your loan accounts. The higher the score is, the lower the probability of defaulting on a repayment within the next 12 months.

Monitoring of your credit file also allows you to detect possible fraudulent use of your personal details to obtain credit previously, and thus minimising the damage which identity theft can have on your credit health.

Pay bill on-time

2. Paying bill on time and in full

Late or missed payments will certainly lower your credit worthiness. Hence, check your bill consistently to ensure that you know when the payments are due. Late fees and interest charges also add up quickly, making it harder to pay off the debt.

Strive to make a full payment instead of minimum payment too, especially for your credit card bill. As on top of the hefty interest charges, the payment pattern of whether a full payment has been made monthly for your credit card is also reflected in your credit report.

Payment history is an important factor in determining your credit worthiness. Over time, the good payment records will help you build up your credit file and propel you to a good credit score.


Image from Penny Bros

3. Building an emergency fund

Save a ‘safe cushion’ of five to six months of your monthly expenses. You would never know when the rainy day will come, such as losing your job or falling ill.

An emergency fund can tide you over your unplanned period of unemployment, especially if you have accumulated a significant sum of credit card or loan balance when you are healthily employed.

It can also help you to cover any out-of- pocket expenses when unforeseen events arise such as major car breakdown, ensuring that you do not have to resort to using credit cards or loan to settle the bill, averting a credit debt.

Spend less

4. Keep credit utilisation low

Lenders like to see plenty of breathing room between the amount of debt reported on your credit cards and your total credit limits. The wider the gap, the better your credit worthiness.

Hence, the next time when you would like to take advantage of your credit limit and only make minimum payment to pay down the balance, think again. Not only will your rollover balance be slapped with a high interest, it will also affect your credit worthiness.

Furthermore, as the outstanding balance continues to snowball, it can reach a point where you find it hard to keep up with the minimum monthly payment and the amount becomes overdue, or what we call, delinquency.

When delinquency happens, it will affect your credit score adversely.

Keep your credit utilisation low and spend within your means. It will not only save you from the high interests but also earn you a good credit.

A good credit is not something out of the reach. Embrace and follow these simple and effective credit habits, and you would soon be on your way to a good credit!

Credit Bureau (Singapore) (CBS) is Singapore’s most comprehensive consumer credit bureau that has full industry uploads from all retail banks and major financial institutions. Our goal is to help credit providers make better lending decisions quickly and more objectively. To check your credit score today, please visit
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