How Singaporeans Can Repair Their Bad Credit Scores

If you’re one of many people who Googled “bad credit personal loan $5000 Singapore,” then you may have thought how nice it would be to apply for a lowest interest personal loan without worrying about the impact of a poor credit score.

One of the first steps to fix a poor credit score requires you to apply for a bad credit personal loan. This might seem counterintuitive, especially if you’re neck-deep in debt. Why would someone take out a new loan when they can barely pay off their current balances? The simple explanation has something to do with credit history. You need to remove the bad record by replacing it with a new one, but this will take serious discipline and effort to pull off.

Credit Score Repair Needs a New Payment History

Credit Score Repair Needs a New Payment History

Banks and licensed money lending companies in Singapore rely on an individual’s payment history probably more than their financial capacity for granting a loan. You may have mismanaged your personal debt in the past, so the best way to overwrite your unpleasant credit history involves a new payment record. You can try to apply for a small loan like what you have searched online. Licensed money lenders are more lenient than banks when approving loans to delinquent borrowers.

Once you get approved for a new loan, it will take discipline to make sure that you don’t repeat your old habit of missing or neglecting payments. Ask for a longer payment period if you aren’t confident about repaying the loan within 12 months. You will pay a bigger total by doing so, but the smaller monthly installments will also make it easier to make a strict budget for loan repayments.

How Long Will It Take to Repair Bad Credit?

How Long Will It Take to Repair Bad Credit?

Some Credit Bureau reports showed that you can essentially on how to clear bad credit history Singapore through prompt payments over a 12-month period. Your “account status history” on the report may show the latest principal amount on your current debt and monthly installments. During the one-year period, you should avoid applying for too many credit cards to avoid a negative hit on your score.

You should get a new card at least twice a year with each application having a gap of six months. You should also hold off on canceling existing cards. Some people think that their credit score will automatically improve if they reduce their exposure to credit card debt. On the contrary, your score may be affected if your balances exceed the recommended limit usage across all your cards.

Financial experts say that using 30% of your total credit limit is the ideal practice. Money lenders in Singapore also consider a person’s credit utilization ratio to determine their credit scores. If you have three credit cards with a combined limit of S$30,000, the credit utilization (i.e. balances) shouldn’t exceed $9,000 every month. This implies that canceling a card will reduce your total limit and increase your credit utilization ratio.

There Are Things That Can’t Be Fixed

A renewed effort to pay loans on time and manage credit card debt can only do so much to salvage a poor credit score, as some aspects of your credit report will remain despite having a better payment history and credit utilization ratio.

Bankruptcy cases, debt consolidation and management, and loan default are the details that will always show on a Credit Bureau report. The document will likely summarize the information as statistics on the top right part of the report. Any current or pending cases will be listed in detail on the rest of the document. A report with a W code indicates a defaulter, which is the most glaring thing that a lender will see as they scan the file.

Think of the W code as a scar that will not go away no matter how diligent you try to eliminate it. It’s the same with repairing your credit score. No amount of timely repayments can fix this blemish on your credit report. An R or S code on the report means that a bank has closed off the loan facility or account. Restructuring for the outstanding balance may have happened based on the code. An H code refers to involuntary closure of accounts with outstanding balances.

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What Will Happen If I Don’t Repair My Credit Score?

The inconvenience of not repairing a bad credit score will manifest when you need to buy a car or property in Singapore. The problem becomes more noticeable if you are not a full-time employee with regular contributions to the Central Provident Fund. Those who plan to apply for a concessionary loan with the Housing Development Board (HDB) should have a clean bill of financial records.

The HDB will examine your credit reports to determine how you can repay the money for a property purchase. It’s safe to say that you shouldn’t quit your job before applying for an HDB loan. Another reason to improve your credit score involves your employability. A company may ask for a copy of your credit report, and they may decide against hiring you for having a history of defaulting on loans or missing the payment due date. This is particularly true for job hunters in the financial services sector.


You can repair your credit score by taking out a small personal loan and pay it off diligently. While there are some things that will remain unchanged on your report, it’s still a good idea to fix your credit history to avoid potential problems in the future. If you have struggled with borrowing money from banks in Singapore, then you should consider a best licensed money lender. Visit A1 Credit today and find out how we can help you with increasing your credit score. 

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