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4 Surprising Mistakes That Lower Your Credit Score

Mar 24, 2017

Has your credit score dropped recently in Singapore? Find out whether you’ve committed one of these four mistakes. Does your credit score report show reduction in points in the last six months? Have you recently applied for a home loan and received an estimate for a lower sum than expected? Your credit score could be one of the main reasons for decreased funding or even a higher rate of interest charged. Analyse your report to account for errors or emerging patterns of credit use.

1. Late or missed payments

If you’ve changed your address, but failed to update the records, you may not receive a particular bill on time or not at all. You end up missing a utility or credit card bill, or settle them after the due date. You may have the best of intentions, but sometimes the stress of daily life takes its toll. Or you may have received a bill alert on your phone or email but forgotten to pay. Both missed and late payments affect your credit score in a negative way. Keep your basic records current, and don’t postpone important credit repayments.

2. Exhausting credit card limit

When you maxed out on one or more credit cards with purchases and cash advances, you inadvertently send the wrong message to future lenders. You’re sending them signs that you have a lot of debt on your hands and can’t efficiently handle your credit. Singaporeans owned about 9.7 million cards (main and supplementary) in 2014, and the numbers have only grown. You most likely have more than one card. So spread your borrowings across them instead of using one alone. Also avoid taking on a large amount of credit in a short period of time. This often indicates financial trouble, even when you’ve the ability to pay on time.

3. Focusing on certain payments alone

Maybe you have accumulated a sizeable amount of debt and want to get rid of it as soon as possible. You have various options to pay off the debt – from tackling smaller debts first to taking the biggest loan head on. In the process you may forget or overlooked payment on certain credit cards. This could easily account for a fall in your score. Whatever debt settlement method you choose, ensure that you pay the minimum due on all your sources of credit.

4. Loan guarantees or family cards

Most of us possess a helpful nature. When your relative or friend is in trouble, you want to help them in whatever way you can. This could be anything from acting as a guarantor for a personal loan or providing them with supplementary credit cards. The additional debt may not affect your credit score by much. But skipped payments or delinquency on their part will not just force you to foot the bill, but hit your score badly. Be careful when you co-sign for others. A better option would be to loan them some money that they can repay you on pre-decided terms. All these little things can add up over a period of time and hit your credit rating when you least expected it. Have your credit scores in Singapore fluctuated in the past? Was there another reason for the lower figure or grading?

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