Yahoo Finance 
5 tips to improving your credit score
By James Yeo
If you are applying for any type of loan, chances are high that a lender will ask for your credentials to access your credit scores.
For those who never have come across a credit score, it is an aggregated number that institutions use to ascertain how good or bad of a risk a person is when it comes to borrowing money.
A credit score represents a joint effort between all the major financial institutions whereby data about a consumer’s credit history is pooled together and aggregated.
In Singapore, the score ranges from 200 to 1,000 – the higher the score the better, as it indicates a person is creditworthy and a lower risk when it comes to loans. Credit ratings are graded HH to AA.
Some of the things that affect credit scores include credit applications, late payments on bills, credit ceilings as well as bankruptcy history and legal proceedings.
Below are some of the ways you can use to improve your credit scores in order to potentially enjoy favorable terms of loans.
1) Make payments on time
Credit scores are adversely affected by late, delayed or non-payments on previous bills. To improve your credit score, all bills must be settled on time. Paying credit balances in full every month helps to maintain a high score.
However, if you are short on funds, at least pay the minimum-due amount on credit cards. You can also make two or three small payments on each credit card bill as a way of preventing the scores from sinking.
2) Correct credit report errors
Credit card reports are not always correct in terms of the information used to aggregate scores. To make sure everything is in order, get your report from Credit Bureau Singapore and check for any errors.
If you do see any mistake, take the necessary steps to ensure they are fixed as they could be the ones dragging down your scores. It is advisable to check credit reports for errors at least once a year.
3) Avoid new credit applications
If your scores have sunk too low, it may be time to avoid new credit applications as they will only push the scores lower. More debt only raises concerns about one’s financial position especially when repayment is a problem.
Whenever you apply for a new credit facility, the lenders will likely make an inquiry against your credit report. Many inquiries over a short period of time have been known to have an adverse effect on credit scores.
4) Cancel any unused cards
If you have many credit cards, consider cancelling the ones you don’t use often. Having too many unused credit cards lowers credit scores as it indicates one is trying to increase available credit.
While cancelling credit cards, it is advisable to maintain cards that have been used for long, as a record of prompt payments helps to improve credit reputation.
5) Don’t close accounts with existing debts
Never close an account with an unsettled debt as by doing so, you are likely to raise an alarm that you are trying to escape financial responsibility. Closing such accounts lowers credit scores.
Conclusion
In Singapore, your credit history stays in credit reports for a period of three years during which they affect credit scores. Bankruptcy data, on the other hand, sticks for five years.
In a nutshell, if you wish to achieve high credit scores, you have to ensure all bills are paid on time, limit inquiries, avoid multiple credit applications and consistently check credit report for errors.
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