Understanding Your Credit Score

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Understanding your credit score

Your credit score is a number used by banks and financial institutions as an indicator of how you are likely to repay your debts and the probability of going into default. CBS credit score is based on the various types of information in the credit report to calculate a number that estimates your level of future credit risk.

The score ranges from 1000 to 2000, where individuals scoring 1000 have the highest likelihood of defaulting on a repayment, whereas those scoring 2000 have the lowest chance of reaching a delinquency status.

Related: How to Read Your Credit Report

Description of Score Risk Grades

How to read your credit score

Suggested reading: Ouch! What’s Hurting My Credit Score?

Your credit score is guaranteed to influence the cost of the big ticket items you have to prepare for such as taking out a mortgage, planning a wedding, qualifying for a car loan and building up for retirement. A good credit score is crucial for these financial successes.

Improving your credit score should be a priority. The higher your score, the better your chances of getting the credit you need. So, do you know your credit score? And more importantly, do you know how to improve your credit score if it’s not measuring up?

Read also: 5 Practical Ways to Improve Your Credit Score

Here are three tips to help you improve on your credit score:

1. Pay your bills on time, all the time

A missed credit card bill payment will have the greatest and longest lasting impact. The more recent the missed payment occurred, the greater that impact will be, and the more missed payments you have, the longer it will take to recover. The prescription here is clear: Pay your bills on time, all the time.

Read: Credit History and How It Impacts You

How you charge purchases to your credit card and pay off your credit card debt every month will determine your credit standing and show how much of a credit risk you are. Paying your credit card balances in full every month helps you to maintain your credit rating and build up a good credit score. This will enable you to use credit to work harder for you, rather than becoming a slave to credit.

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2. Avoid multiple new credit applications within a short period of time

There is no hard and fast rule that determines the number of new credit applications that will push you from looking like a responsible consumer to an unreliable one as every bank has a different set of requirements and criteria to satisfy.

Read: The Complete Guide to When Your Credit Card Rewards Points & Miles Expire

Do not simply apply for new lines of credit just because it is easy to. Applying for too many credit applications over a short period of time may indicate credit hunger and may adversely impact your credit score. Apply for credit only when you find yourself in a position to comfortably pay it back.

Check out: Credit Card Debt Repayment – Guide to Your Options for Reducing Interest Rates

3. Check your credit report and rectify any mistakes

Any incorrect information you find on your credit report could be affecting your credit score. Check your report thoroughly and get it fixed if you do see a mistake or factors that have pulled down your score. It is advisable to check at least once every 6 months as the information in your credit report determines your credit score. Take steps to fix it and follow up to ensure it has been resolved.

Related: How Do I Correct Information in My Credit Report?

If you wish to dispute the completeness or accuracy of any item of information such as the account status, previous enquiries and overdue balances, do consult Credit Bureau Singapore (CBS) and CBS will post a notice in your credit file that the credit data is being disputed and is under investigation.

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