If you live in Singapore and want to get a credit card, updates will affect your score. This guide aims to guess how often credit scores update in Singapore
The Asia Pacific region accounts for 50% of all global credit card expenditures. That’s $12 trillion worth of credit card spending!
This is due to the conscious way people in this area use their credit cards and make their credit work for them. Fun card perks are amazing, but that’s not the only way to work the system in your favor. Credit card users receive a credit score that determines their responsibility as a borrower and can earn them better future opportunities if it’s good.
If you’re wondering how a credit score is decided and how often do credit scores update, then you’re in the right place! Stick with us as we breakdown this enigmatic financial score.
What Are Credit Scores?
You may have seen in our guide to using credit cards that we mention credit reports and credit scores, and the profound impact they can have on your financial endeavors.
But what is this mysterious number that controls so much?
In a nutshell, a credit score is a formulated number that symbolizes how good your credit is. We’ll get into what constitutes a “bad” and “good” credit score later, but for now, focus on the idea that your credit score is a number and is used to represent your credit. When banks, companies, and agencies are determining what loan or credit line to give you, this is what they’ll look at.
Using your credit report, as well as information sourced from other providers, credit bureaus decide what your score is.
Credit reports are like your digital footprint of the financial world. It contains information about your current bank accounts, payment history, income, and housing.
If you want to check your score, your bank will have a report available for you.
Why They Are Important
Unless you have mountains of cash stashed under your mattress as our grandparents did, chances are you’ll need to take a loan out at some point.
For example, when you buy a car or a house.
Cars and houses are thousands of dollars and rarely do people have that money available. So individuals take out a loan from the bank to help them purchase it. When deciding what type of loan or interest rate to give you, or if you even qualify for one, the banks look to your credit score.
Depending on how high or low your score is, they’ll give you a reasonable deal.
That’s why this score is so important because it decides how capable and reliable you look to financial institutions. Opening a business, owning property, buying a car, and getting student loans for yourself and your children all rely on this score.
How Often Do Credit Scores Update?
We know this sounds intense, but it isn’t so bad.
Credit scores are routinely updated so they reflect your current standing. Meaning, if you have a low score you can always bring it up, but alternatively, if you have a high score, it always can drop. However, updating credit scores means you have the opportunity to make it better.
Each bank varies slightly, but on average, your credit score is updated every 30-45 days. During that time is when you can strategically start to increase your credit score rating.
Even if you already have a high credit score, you still have to maintain it each month.
High Credit Score vs. Low Credit Score
We’ve heard a lot about high (good) and low (bad) credit scores, but what do they mean?
A high credit score means in the eyes of the credit bureau, you’re a financially responsible individual. You make payments on time and keep your debt low. A good credit score can earn you lower interest rates and higher credit limits because you’ve proven your ability to pay back loans.
On the other side of that, a low credit score shows you’re an irresponsible borrower. Whether you forget payments and pay too late or accrue more debt than you can handle. A bad credit score can result in higher interest rates and loan refusals. You can say goodbye to new cars and new houses if you maintain a low credit score.
Each country has its own rating. For Singapore, the score is rated from 1000 to 2000. 1000 being someone with low credit, and 2000 being someone with high credit.
How to Repair Credit
The good news for low scorers is the credit you have now isn’t necessarily the credit you’ll have in 30 days. If you want to improve your score or simply maintain it, follow these steps.
The first thing you can do is work on your credit utilization rate. This is the ratio between your total debt and total available credit. As a rule of thumb, it’s best to have more credit available than debt.
Always make payments on time. Failing to make payments on time shows you’re not a reliable borrower because you’re not following the contract. Even falling behind a few days once can negatively impact your score.
Remember to keep your debt low. If you can pay off your credit card every month, that’s ideal as it shows banks you’re not reliant on your credit card. However, if you spend more than you can pay off in a month, pay off as much as you can whenever you can. If your current score is low, the first thing you’ll want to do is pay off the current debt.
Your Credit Score and You
Having credit is an essential tool to owning hot ticket items in your future, like cars and property. But it can also severely hinder your ability to purchase these as well.
Keep a close eye on your credit scores update, so you always know where you stand and make building good credit easier.
We hope this article gave you the insight you needed into credit scores and how they can affect you. Here at Money Advisor, we believe all Singaporeans deserve access to information on how to manage money. If you’re interested in beginning your credit journey now, check out our favorite credit cards as the perfect place to start!