Your credit score is one of the important things to watch out for to maintain good financial health. Even the best licensed money lender Singapore would look at this number before approving loans.
But your credit score is not the only thing to consider, so it’s not worth stressing over. Here are 5 reasons to avoid fussing over your credit score.
It takes focus away from other important financial indicators
Financial institutions look at other indicators of financial health aside from your credit score. The biggest example of this is your Total Debt Servicing Ratio (TDSR).
As required by the Monetary Authority of Singapore (MAS), up to 55% of your total income can be allocated for debt repayments. If you have taken on too many loans, you can no longer qualify for additional loans if doing so will make you exceed the 55% limit.
Lenders and banks in Singapore also look at other factors, like the stability of your income, your property location, age, and your previous loan and credit history. The credit score is just one of the many factors they look at.
Credit score does not impact interest rates for some types of loans
For things like home loans in Singapore, interest rates are often fixed and regulated by the MAS. Your credit score does not influence the interest rate you get. The financial system in Singapore is different from countries like the United States, where higher credit scores merit lower interest rates for mortgages and home loans.
With that, there’s no need to stress yourself over your credit score if you are looking to apply for a home loan. While it’s still important for your financial health, it’s not the only thing you should consider.
Credit score does not have much influence on daily needs
Spending for essentials like rent, utilities, and mobile plans is not dependent on your credit score. If you worry that your credit score may be less than stellar, it doesn’t mean you will not qualify for lease contracts or applications for electricity and internet.
With those in mind, you can still live decently in Singapore despite a lower-than-optimum credit score. You will not have to live on the streets or rely on unemployment benefits.
Easy, centralised access to your credit report
In Singapore, only one institution is responsible for maintaining and distributing your credit report, which is the Credit Bureau Singapore (CBS). That means credit history, reporting, and other aspects that influence your credit score are all within the reach of the CBS. You don’t have to deal with multiple credit reporting companies.
With that, you can have more confidence in your credit score. What you get from CBS is the real deal. It is the same thing that banks and lenders look at.
Employers do not use your credit score as a basis for hiring
Employers in Singapore do not look into your credit score when making hiring decisions. Whatever your credit score, you can get a job if you qualify for it. There is no need for you to fuss over your credit score to increase your chances of getting hired.
So when rebuilding a low credit score and getting out of debt, don’t be afraid. Employers will not reject you solely because of a low credit score, so you can earn back what you have lost.
Conclusion
With the financial system in Singapore, you do not need to keep worrying about your credit score to maintain financial health. Focus on creating good money habits, like budgeting, saving, and investing. This way, you can start building wealth sooner to secure your future.
