A credit report is a document that contains the summary of your entire credit utilization, acquisition and your repayment history. A Credit Report is generated by different Credit Bureaus and issued to individuals who are members of the bureau enquiring about the credit status of a person. Alternatively, any person can also approach the bureau and request for their credit report.
A credit report contains specific and detailed information about a person’s credit history. It contains information such as the person’s name and complete profile which does not include the physical address and contact information. It contains credit information such as any past credit checks on the person, their yearly credit repayment trend, records of any defaults including the date when it occurred, bankruptcy records of the person going back 5 years from when they were discharged, any terminated and closed accounts going back 3 years from their closure date. They also have a record of the aggregates of the allowed credit limits as well as the aggregates of the owing balance of the person.
Currently, Singapore only has 2 credit bureaus that have earned the authority to perform credit checks on the citizens of the island and offer credit reporting services to its members. They have been cherry picked and published by the MAS (Monetary Authority of Singapore), namely, the Credit Bureau (Singapore) Pte Ltd. and the DP Credit Bureau Pte Ltd. The information that these two credit bureaus file in a person’s report can delivered to them by any of their affiliates that can include banks, other financial institutions, utility companies and credit card companies. They can also obtain their information from any public records such as bankruptcy proceedings information.
The Credit Bureaus fulfill the roles and responsibilities of being the credit information repositories, providing information that aids members to assess the risks of lending money to borrowers approaching them for different loans. In this manner, Credit Bureaus assist banks and other financial institutions to make better loaning choices that in turn help them to protect their profit margins. Having said this, it is important to note that the Credit Bureaus are not in any position to accept or deny credit applications. The banks and other financial institutions only use the information provided by these credit bureaus and decide to accept or refute credit to applicants based on their own policies, terms and conditions.
Your credit report contains a systematic breakdown of your credit reimbursement ability as assessed using your previous credit data. This information is then used by bankers and other financial lenders to assess your ability to make regular repayments for the loan that they grant you. At the end of your credit report, you will see a four digit number, this is called the ‘credit score’. This credit score is derived based on all the data on your credit report. This number or score will range in between 1000 and 2000 where 1000 implies that you are most likely to default on your loan and 2000 being the least likely to default on your loan. There are also in between ranges between AA and HH, wherein HH implies the most risky lending option and AA, the least risky.
Therefore, it is advisable to have a good credit history to strengthen your credit score in your credit report to ease your loan application process. Also, another reason to maintain a good repayment history is that the data of your overdue payments, non-payments, defaulting on previous loans are all recorded and will remain as a blotch on your credit report for years on end, thereby affecting your credit score adversely. A low credit score will pose a serious threat for any future borrowing opportunities.
An advantage of monitoring your credit score is that you can protect yourself from any potential fraud activity where someone can steal your personal details and credit score to secure a credit of their own. Even though there are many factors that a bank or any financial institution will deliberate on to accept or reject your loan application, your chances of acceptance are accentuated with an unblemished repayment history.
There are various factors that affect the final credit score that you receive. These factors are as follows –
Utilization is the credit amount that you have used or currently owe on your account.
You will be viewed as a huge credit risk when a lender notices that you have applied for numerous credit applications recently and thereby judging you to be a financially desperate. Hence, it is always better to limit your new credit applications.
Your credit score is negatively impacted by when you start making late payments and overdue payments on loans or even on your utility bills. This trend will reduce your credit score.
If you have a long credit history, you are viewed as less risky and more stable. On the other hand, if your credit history is short, it implies that there is not sufficient information to make a better assessment of your creditworthiness. Therefore it is always advisable to start building your credit as soon as you turn 18 years old. Your repayment conduct reflects the latest 12 months history.
The credit available highlights the difference between how much credit you have used up so far and how much credit you have left on your credit limit. The higher the credit limit left, the better your credit report will look.
All new applications that you have applied for will lead to as many credit enquires. The enquiries will also be posted on your report. If you have too many credit enquiries within a short period of time, it reflects poorly on your credit score.
You can request for your credit report from any one of the following – the credit bureau, any Sing Post branch, CASE offices or Crimson Logic Service Bureaus. When you request for your credit report, a transaction fee will be charged for the same. As an alternative, you can also subscribe to “My Credit Monitor” which is a premium service that will evaluate your report on a day to day basis and send you a notification via email on event of any material change. This premium service enables you to detect any signs of possible Identity Thefts and take appropriate action before any serious damage occurs to your credit report.