Personal loans are one of the alternative ways to get cash to pay off the needful quickly. One of the criteria to be successful in getting a loan is having a good credit score. If you have bad credit, it may be quite difficult to find a financial institution in Singapore that will approve your legal loans. This article will detail what is “bad credit”, the options for loan in Singapore for bad credit, and how to improve your credit scores to apply for future legal loans.
What is bad credit?
In Singapore, your credit payment history is recorded and aggregated by Credit Bureau Singapore (CBS) and influences how financial institutions such as banks and licensed money lenders in Singapore view you as a borrower.
A bad credit score refers to poor features of your credit history indicating that you are a high-risk borrower. Some of the causes that can lead to a bad credit score include:
- Defaulting on your loans
- Failure to pay off debts promptly
- Recent declaration of bankruptcy.
Can you get a personal loan in Singapore with a bad credit score?
Yes, it is possible to obtain legal loans in Singapore with a bad credit score. Although, it is more difficult to get approval for a personal loan with bad credit than it is when you have good or excellent credit, especially if you are considering personal loans from banks. Licensed money lenders in Singapore might still be able to approve your legal loans.
How can I get a loan with “bad credit”?
First, check your loan eligibility (i.e. minimum age or income requirements) for the personal loans that you intend to apply for. The qualifying criteria vary slightly from different financial institutions, however, most lenders accept applications from people between 20 and 65 years old.
Then, compile a list of the potential money lenders that you qualify for. Some may offer affordable interest rates for your legal loans. However, qualifying for a loan in Singapore for bad credit may result in banks quoting higher interest rates; therefore always check ahead of time if they offer guaranteed rates for your personal loan.
Once you’ve shortlisted your list of providers, you can start applying to them – one at a time, please. The outcome of your loan application may differ depending on the lender, but consider the loan conditions from one lender before applying for the next. This is because applying for legal loans at multiple lenders concurrently can trigger a flag to the credit bureau that you’re rushing to get hold of money and potentially reduce your credit score.
Types of loan for bad credit:
At Dio Credit, we offer various loans in Singapore for bad credit to suit your needs. Some options include:
Secured loans such as home equity loans
You are more likely to get a secured loan approved as you will be offering your property (i.e. property or car) as collateral to the lender. We offer affordable repayment plans on a case-by-case basis.
Adding a co-signer for your legal loans will help you get approved even with bad credit. A co-signer must be someone with a high and steady income, and a better credit score than the primary borrower. This assures the lender that the loan will be repaid in a timely manner. Getting a co-signer with a better credit score than you can help lower interest rates too.
Debt Consolidation Loans
Debt consolidation is a refinancing program that offers you an option to consolidate all your existing debts into a single loan. Dio Credit will assist to consolidate all your outstanding balances from your multiple legal loans and come up with lower interest rates and affordable monthly fixed repayment plans.
3 Ways to improve a bad credit score
1. Restructure your debt
Start by knowing what loans you have, interest rates, and terms of loans. By organising them, you’ll have a clearer view of the amount you owe and make a plan on how to begin effectively paying them off.
2. Make full repayments
Your credit score will slowly improve if you remain constant in paying off your loans in full and on time. The record of your consistency in payment reflects to lenders that you are a responsible borrower. Taking smaller loan amounts in the future means it is easier to repay them. Read more on how to get your fast cash loans approved here!
3. Go for credit counselling
If you need advice on improving your credit scores or adjust your financial habits, Credit Counselling Singapore is a good place to start. It is a non-profit organisation that can help restructure your debts.
Your past credit history, even from many years ago, might still haunt you when applying for loans with banks, decreasing your chances of getting a loan in Singapore for bad credit. Licensed moneylenders in Singapore like Dio Credit, however, might still be able to approve your legal loans on a case-by-case basis. Contact our friendly agents for more information today!