Getting a Loan from a Bank even with Bad Credit

Whether you want to meet a short-term expense like buying home appliances, going on a vacation or dealing with an emergency or you want to meet a long-term expense like acquiring an asset like a property, a condo or a car, as a typical Singaporean you will turn to a bank for a personal loan, a home loan, an auto loan or any other credit facility.

Which is why the consumer lending statistics published by the Monetary Authority of Singapore for the month of August 2016* indicate total consumer loans at S$ 246,533.4 million!

However, getting a loan can potentially run into a major stumbling block – bad credit scores. Let us explore this topic in a little more detail:

What is a credit report#?

When you apply for a loan, the bank to which you’ve applied will check your creditworthiness before it decides whether to extend a loan to you. Your creditworthiness is determined by your credit report. Your credit report will usually contain the following:

▪ Your personal data – Information such as your name, NRIC & date of birth
▪ Your current credit relationship summary – Summary of the number of credit facilities you hold & any defaults thereon
▪ Your credit facilities information – Information on the credit facilities you have with the bureau’s members & your repayment history for the last 12 months
▪ Inquiries summary – Number & type of inquiries by financial institutions into your credit report
▪ Default records – Information on any default in repaying your credit facilities, including the balance outstanding & the current status of the account
▪ Bankruptcy records – Information on whether any bankruptcy proceedings have been taken against you, obtained from the Insolvency and Public Trustees Office & displayed for 5 years from the date of discharge

Who provides your credit report?

There are only 2 credit bureaus that have been accredited by the Monetary Authority of Singapore (MAS) – Credit Bureau Singapore (CBS) and DP Credit Bureau (DPCB). Only these organizations can provide you with your credit report.

How can you view your credit report?

You can buy your credit report from the two recognized bureaus either online or by visiting the bureaus at their offices. You will need your SingPass ID and password. You may also need to pay transaction fees for purchasing your credit report.

You can also consider monitoring your credit score by subscribing to the “My Credit Monitor (MCM) service offered by CBS. This service alerts you to any suspicious activities like identity theft or changes that can affect your credit reputation. You can sign up for it at any Singapore Post branch or at CBS’ main office.

Why do I need my credit report?

Your credit report will help you understand whether your credit worthiness (or credit score) is high or not. When you know your credit score is high you can safely apply for that loan; when your credit score is bad, you will need to take corrective action to avoid your loan application from getting rejected or getting an approval for a lesser loan amount.

Should there be discrepancies, or if you disagree with some information in your credit report, you can write to the respective credit bureaus with your clarifications. A notice will be posted in your credit file while the credit bureau investigates. If an amendment is subsequently made, a revised report will be sent to all credit bureau members who have made inquiries on you in the past 3 months.

What can I do to bring my credit score up again^?

Take these broad tips into consideration as you go about repairing your credit score:

▪ Repay outstanding/overdue credit on time
▪ Keep the number of credit facilities manageable
▪ Clear bankruptcy / litigation
▪ Check your consumer credit report regularly (at least annually) to ensure there are no errors reported. This is especially important when you intend to apply for new loans or credit facilities.

* This includes the following categories: housing and bridging loans, car loans, credit cards, share financing and others.
# Data source: eCitizen portal of the Government of Singapore.
^ Data source: DP Credit Bureau Singapore.

Personal Loans in Singapore

personal loan
Personal Loan in Singapore

Personal loans in Singapore can be obtained from three distinct quarters: banks, financial institutions and licensed money lenders. Although the fundamental idea of offering loans remains the same across sectors in Singapore, each loan providing entity will be different in its own way. Not all banks, financial institutions and money lenders offer personal loans in Singapore, so it’s important to arrive at a match between your loan requirements and the loan offering entity. Never be tempted to obtain a loan from anyone who is not licensed to offer a loan.

Let’s look at a few pointers that one needs to consider

  • Pick up a loan amount that you are able to pay, easily and consistently
  • A low rate of interest need not always mean a good deal. There can be default fees, other hidden penalties and the rate of
    increase in your interest if you happen to default matters
  • Decide if you want a fixed flat interest rate or a reducing interest
  • Find out if there is an early closure fee

These key pointers apart, as a rule try to borrow from banks as much as you can, because established banks usually have their regulated norms and come under scrutiny constantly. They cannot afford to be arbitrary in their interests and policies. Money lending institutions however need not be that careful.

Need Personal LoanLuckily in Singapore, it is easier to obtain a personal loan than any other loan and there are a whole lot of loan providers. Skyline credit, Credit assist and JR Star credit are some of the known names in the licensed money lending segment in Singapore, while HSBC, ANZ Singapore, and Citibank are a some of the well known banks that offer personal loans.

Citibank Personal loans have installment choices up to 60 month tenure, an option private moneylenders might not have. Bank’s Loan interest rates too, like Citibank’s, usually reflect the averages prevailing in the market and cannot be arbitrary, while a private lender can set their own norms.

Even though in Singapore the business of lending is strictly regulated, it is always best to go with established names and not fall for the famous “ unbelievably less interest rate”. Some banks also call you and speak to you in detail if you fill up relevant information online, and personally I think its the right way to go about it, by having a detailed chat before taking a decision.