According to the Monetary Authority of Singapore, there are about 8.1 million issued credit cards in Singapore with a total card billing of about $3.84 billion as of September 2015. A survey conducted by HSBC in 2012 also reported that the average cardholder in Singapore holds about 3.3 credit cards per person.
Our affluent demographics in Singapore make our people prime targets for banks who are looking to grow their credit card business. This explains why it is a common occurrence to bump into a credit card salesperson wherever we walk around near a mall or a MRT station.
Credit cards by itself are neither good nor bad. A responsible credit card holder can use cards effectively to earn discounts and rebates. An irresponsible user may overspend and be saddled with bills that he or she cannot clear at the end of each month.
Your Own Credit Score
Do you know you have your own personal credit score in Singapore? Not many people realize that banks are keeping track of their credit cards usage with the information being aggregated onto a centralised organisation, the Credit Bureau Singapore (CBS).
What CBS does is that it pools information from various banks that has a banking relationship with the individual to determine the credit risk of the person. And yes, if you ever own a credit card, you would have such a report with CBS already, even though you may not have seen it before.
To find out your own credit score, you would need to purchase the credit report from CBS. This would cost you $6.42 inclusive of GST.
Understanding Your Credit Score
The CBS Credit Score is a four-digit number which is based on your past payment on your loan account. The score ranges from 1000 – 2000. The higher the number, the better your credit score.
Similar to examinations, there are grades attached to this score. If your score is between 1911 – 2000, you would be classify under the Risk Grade “AA”, which is the best score you can attain. The worst grades you can receive would be “HH”.
Factors That Affect Your Credit Score
CBS has an algorithm in place to automatically determine the credit score of each individual. This algorithm is fluid and would change depending on the actions of the individual. Here are some factors that would affect your score.
1. Utilization Pattern
This refers to the amount of credit used on your account.
2. Recent Credit
If you start applying for multiple credit cards in a short period of time, or try extending your credit limit, this would affect your score as well.
3. Late Payment
It goes without saying that late or default payment will affect your score.
4. Credit Account History
A person who has a long and established credit history will be looked upon more favourably compared to a new applicant. You can’t do much about this except allow sufficient time to show the banks that you are a reliable credit card user.
5. Available Credit
This refers to the amount of accounts you hold.
6. Enquiry Activities
If there are too much enquiries made on you, that would affect your credit score as well. The reason is that it signals that you are trying to take up more credit cards, and hence, the enquiries from banks.
Why You Should Keep A Good Credit Score
Most banks would rely on your credit score before deciding on any credit decision to be made. As such, keeping a good credit score would make it easier for you to obtain credit and apply for loans. This includes both housing and motor vehicle loans, in addition to credit cards and personal loans.
Banks may also use your credit score as a gauge on whether you are a good customer to be keeping. For example, they may base their decision on whether to waive your credit card renewal fee based on your usage of the card and also your scores. Each bank has its own discretion on how the CBS score would help them in their decisions.
A great score acts as evidence that you are a reliable person to lend money to. So be familiar with your score and improve on it by making prompt payments on your bills.