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How Can Your Credit Loan Be Affected By Your Credit Score?

Improving credit score for credit loan application

Are you planning to apply for a credit loan in Singapore? The terms of your loan, such as interest rates offered, may be affected by your credit score – so if you have been taking multiple loans or if you have not been repaying your loans on time, do take note.

We will share more about the factors that could affect your credit score and the impact they could have on your loan, regardless of whether you are applying for a bank credit loan or with a licensed money lender.

What is a credit score?

Your credit score is an important determining factor when you apply for a bank loan. The score comes in the form of a number between 1000 and 2000. It is used as an indicator of how likely you would repay your loan. The higher the credit score, the less of a credit risk you are deemed to be.

If you have low credit risk, you may be offered a larger loan principal, a lower interest rate, and/or a longer repayment period. The lender may even waive some fees and charges if you have a good credit score.

In Singapore, the calculation of credit scores is done by an independent body known as the Credit Bureau Singapore (CBS). This table summarises the relationship between credit score and probability of default, along with the corresponding risk grade:

Score Probability of default Risk Grade
1911-2000 0-0.27% AA
1844-1910 0.27-0.67% BB
1825-1843 0.67-0.88% CC
1813-1824 0.88-1.03% DD
1782-1812 1.03-1.58% EE
1755-1781 1.58-2.28% FF
1724-1754 2.28-3.46% GG
1000-1723 3.46-100% HH

Banks and other major lending institutions will obtain your credit score using the CBS Credit Report when you apply for a credit loan. You can also obtain your credit report directly from CBS even if you are not applying for a loan.

What are the key factors that affect your credit score?

Your credit score is affected by several factors and these are the 5 most important ones. By understanding how they work, you will be able to improve your credit score.

1. Payment history

Your payment history is a good indicator of your trustworthiness as a borrower. Credit loan applicants with no previous defaults and who have always made payments on time are seen as reliable borrowers. Lenders will usually offer them the best terms as a ‘reward’ and incentive for responsible past financial behaviour.

2. Length of credit history

Every lender wants to know their customer’s financial history to minimise the chances of approving a bad credit loan in Singapore. If you have been in the workforce for many years and have credit card records, credit loan records for personal loans, car loans, mortgage payments, and other related records, lenders would look at these before they decide on your loan application. Younger Singaporeans and expatriates who lack this financial history could be perceived to be at a higher risk of default.

3. Credit utilisation

Credit utilisation is the proportion of the credit limit you have already accessed. For example, someone with a $20,000 credit limit who has taken a credit loan of $5,000 has a credit utilisation of 25%. A high credit utilisation figure indicates a high level of debt. Credit utilisation of less than 20% is best and you should strive to never exceed 30%.

4. New credit

New credit refers to recent applications for loans, credit cards, etc, by the same person. A sharp increase in the amount of new credit can be a red flag for lenders, even if the applicant does not exceed the 20% to 30% ideal credit utilisation range. Instead of applying for several credit lines within a short period, pace your applications over an extended time.

5. Credit mix

A good credit mix means that the loan applicant has a diverse range of credit lines. For example, the typical borrower might have a home mortgage, car loan, two or three credit cards, and possibly a personal loan. It shows that the person is living a balanced life with typical obligations. Conversely, someone with no home or car but only a string of loan applications may appear to be living a financially risky life.

How does a good credit score affect your credit loan?

A good credit score is a strong financial asset. Here are 5 reasons why you should try to improve your credit score before you apply for a credit loan.

1. Loan approval

A good credit score assures a lender that you are likely to repay your loan. This assessment as a low-risk borrower means your loan application will have a higher chance of approval if you qualify. It can be tough to get a bad credit loan in Singapore with banks, but you might find it easier to get your loan approved (despite bad credit) with licensed money lenders with less stringent credit checks.

2. Larger loan amount

Another benefit of a high credit score is that lenders would be more open to extending larger loans to you. This can be important if you are making large purchases such as property, vehicles, or tertiary education that requires you to take a larger loan.

3. Lower interest rates

Lower interest rates mean you pay less for the same loan principal over the same loan term. It is like getting a discount for a service even without a sale or promotion. A good credit score helps you save money on interest while enjoying the convenience of a regular loan. Do also note the different types of interest rates and how they are calculated.

However, be very careful if any financial institution offers you ‘interest-free loans’, as there are often high fees involved.

4. Longer loan tenure

A longer loan tenure allows you to stretch out your payment over a longer period, so you pay less for each instalment. This is a very convenient feature if you are struggling to balance your budget every month.

5. Possibility of fee waiver

While you are not guaranteed a fee waiver simply because of a good credit score, it is certainly a possibility with good lenders. Just like lower interest rates, this is a monetary reward that allows you to save when you borrow.

Tip for borrowers: Remember to compare credit loans between different lenders so you can find the best rates from the best credit loan company that best fits your circumstances.

Get easy approval credit loans with Galaxy Credit

Are you looking for a credit loan but worried about your credit score?

At Galaxy Credit, our loan applications undergo less stringent credit checks as compared to banks, and you may get loan approval even with a bad credit score. We provide a seamless, fast, and secure online application process.

Apply for a loan with us now.



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Related Posts

With the economic impact of COVID-19, it is common for affected individuals experiencing loss of income to start seeking financial assistance such as securing personal loans with the lowest rates. If you happen to need emergency funds but do not want to borrow from friends or family, you can consider taking up a personal loan.

Here are a few questions to consider before applying for one.

What are the requirements for a personal loan?

If you are looking to secure a personal loan from banks in Singapore, you have to take note of the requirements for eligibility.

Firstly, you have to be at least 21 years old with an annual income of at least S$20,000 a year. If you are a foreigner (with an employment pass of at least 12 months validity), you will need an income range of S$40,000 to S$60,000 a year. If you make much more than $30,000 a year, banks might extend lower interest fees to you.

The requirements to borrow from a licensed moneylender is pretty straightforward. All you need is the application form (which you can fill up online), plus other supporting documents that may include:

  • Proof of the borrower’s total income for the preceding 3 months prior to loan application
  • Utilities bills
  • Pay slips; or Income tax statements

And possible supporting documents for foreigners:

  • Original valid employment pass
  • Passport
  • Appointment letters from the borrower’s employer; and
  • Bank statements

How much can you borrow according to your income bracket?

If you are choosing to secure a personal loan from a licensed money lender instead, the maximum amount that you can borrow depends on your annual income. Based on the Ministry of Law’s guide to borrowing from money lenders, for Singapore citizens and PR, If your annual income is below S$10,000, then you can only borrow up to S$3,000. If you’re a foreigner, S$500.

If your annual income is between S$10,000 to S$20,000, the maximum amount you can borrow is S$3,000 for Singapore citizens/PR and foreigners residing in Singapore.

If your annual income is over S$20,000, then you can borrow up to 6 times your monthly income for both Singapore citizens/PR and foreigners residing in Singapore.

Here’s a summary of the annual income and maximum loan amount for each income bracket:

Annual Income For Singapore Citizens and Permanent Resident Foreigners residing in Singapore
< $10,000 $3000 $500
$10,001 – $20,000 $3000
> $20,000 6 times of monthly income

Understanding personal loan interest rates

Lenders make their decisions based on factors including credit records and other existing credit facilities. To get the lowest personal loan rates, you need to build a strong credit report. Borrowers with high credit scores tend to get personal loan interest rates that are low.

When borrowing personal loans from banks in Singapore, they will typically label their interest rates as x%, which stands for a customised interest rate that you would only see once your application is approved. The interest rate is usually dependent on your credit score, loan amount, and your loan tenure. What you should be looking at is the effective interest rates or EIR as it includes processing fees and your loan repayment schedule, which is a true reflection of the cost of the loan.

When borrowing personal loans from licensed money lenders in Singapore, the money lender has to go through the terms and conditions of your loan such as repayment schedule, late fees, and interest charges before you sign the contract. A loan contract stating all the terms and conditions is required by law. The difference between signing up with licensed money lenders as opposed to banks is the quick turnaround time to get your funds, which can be as fast as an hour.

How to maintain my credit score?

An infographic explaining how personal loan interest rates work in summarised points

Maintaining a good credit score is part and parcel of getting the lowest personal loan rates. Banks and other financial institutions can offer a lower interest rate for a loan if your credit score is high. Credit scores are indicators of creditworthiness or the indication of the likelihood of a borrower paying their debt on time.

A great way to maintain it is to pay all your credit card bills and loans on time and in full. Also, refrain from applying for multiple loans at the same time from various money lenders as this will lower your overall credit score and increase your debt threshold.

Once you have a good credit score, you can leverage this as a way to get low-interest rates for your future loans. You can find out more about your credit report and rating from the Credit Bureau Singapore or Singpost branches at a $6.42 inclusive of GST.

Looking for low personal loan interest rates in Singapore? Find out more about your legal loan options with Galaxy Credit today.

Cryptocurrency is all the rage these days, with terms like crypto millionaires and NFTs (non-fungible tokens) on everyone’s lips. Since most people like quick cash, investing in crypto is something we might have considered.

In this article, we explain what exactly Crypto is, its risks and benefits, and whether you should invest in it. If you are looking to make some quick cash to either pay loans or increase your net worth, crypto could be an option.

What is Cryptocurrency?

A cryptocurrency is a form of payment that can be exchanged online for goods and services. The most famous of them is Bitcoin, which was invented in 2009 by an anonymous person. It works via blockchain technology, which transmits data and records transactions. Also, cryptocurrencies are decentralised, which means they are outside the authority of governments and banks.

Many companies, including a few Singaporean ones such as and StraitsX, issue their own cryptocurrency, also called tokens, which can be used to buy goods or services that the said company provides. There are currently more than 10,000 different cryptocurrencies being traded publicly. All cryptocurrencies also have the same value in every country and there are no exchange rates.

How can you hold Cryptocurrencies?

There are three main ways to hold cryptocurrencies. All involve having a “wallet”, which is an account that holds your crypto.


Firstly, you can hold them on exchanges such as Binance or Coinbase. On such platforms, you will be issued a “hosted wallet”, so-called because these platforms hold the wallet.

Non-custodial wallet

A “non-custodial” wallet allows you to have full control over your crypto. The downside is that if you lose your password, the wallet is gone forever.

Hardware wallet

Unlike the previous two options, a “hardware wallet” is a physical device the size of a thumb drive that stores your crypto. The upside is that you cannot be hacked since this is offline, with the downside being an inconvenience.

How do you make money out of Cryptocurrencies?

Much like stocks, the value of your portfolio increases when the price of the crypto token/s you hold rises, and vice versa. In other words, you make money when you sell the crypto tokens at a profit.

Cryptocurrency risks

As with all investments, there are risks. Crypto is known to be more volatile than stocks or gold, which is why it would be good to keep a healthy capital at bay so that you may buy more when it drops and sell when it’s at a higher price.

No sure-win crypto token

Although there are many established tokens with reputable companies behind them, the market is very competitive, with many tokens getting unlisted every few months. If you happen to hold such tokens, you lose all their value.

Vulnerability to hacks and criminal activities

For example, if your crypto is stored on an exchange, hackers can hack into your account and transfer your assets to their accounts. You may or may not be able to recover your crypto tokens — some are traceable while others are untraceable.


These tokens are often either hyped-up to offer extremely good services, such as giving you a percentage of their earnings, or entice you to invest by a tactic called “pump and dump”. “Pump and dump” happens when a token suddenly rises many times in value, attracting you to buy at an already high price. Once enough people buy at a said high price, the manipulators will “dump” the price by selling all their tokens, leaving you at a great loss. You may end up needing to pay loans that you have borrowed to buy such tokens looking for quick cash.

Cryptocurrency benefits

Many see cryptocurrencies as the currency of the future. We may end up using coins like Ethereum or Bitcoin to pay our monthly bills, or to procure certain products or services. Hence, buying these coins may be considered a long-term investment.

Get cash quickly

There is indeed such a thing as making quick cash. In May 2020, Bitcoin’s price was about USD 9,500. In May 2022, it was hovering around the USD 31,000 mark, though, in July 2022, it went down to around USD 19,000. Many coins have grown exponentially over just a few days, such as DogeCoin, which often pumps dramatically due to a tweet from billionaire and Dogecoin fan Elon Musk.

Advancing technology

The technology behind crypto, blockchain, is also why many people believe in digital currency. This technology is touted to be able to revolutionise industries from shipping to gaming. Having many believers and potential, many investors believe that cryptocurrency is not a fad and will only become more important as time goes on.

High liquidity

Some cryptocurrencies have high liquidity. This means that you can sell or buy them very quickly at market price. For example, if you need money to pay loans, you can simply liquidate your tokens for fiat, which is a term for real-world money.

Should You Invest In Crypto?

It depends if it is within your means. It is important to remember to never invest more than what you could comfortably afford to lose.

Investing in crypto can be an option to diversify your portfolio, which is always a good thing. This is especially true if you believe in the technology behind the tokens that you buy, and also that crypto usage will become more widespread as time goes by. However, do take note that the MAS discourages the general public from engaging in cryptocurrency trading as it is “highly risky”.

Bent on snagging some tokens right now but lack the funds? You might want to consider borrowing a relatively small sum from Galaxy Credit, a 24-hour money lender in Singapore, anytime, any day. As it stands, nobody said you have to invest a tonne of money into cryptocurrency for potentially big wins!

Whether you are a Singapore citizen, permanent resident, or foreign worker residing in Singapore, securing a personal loan in Singapore has never been easier. As long as you qualify for the type of loan you are applying for, the process is pretty simple, quick, and straightforward. If you’ve reached a tough spot financially and are in need of emergency cash with the lowest personal loan rates, here are some tips you should follow when considering applying for a legal loan in Singapore.

1. Check your credit score

A credit score is used by banks, financial institutions, or licensed money lenders to gauge the likelihood of you paying off your loans on time. If you want to get the lowest personal loan rates, you have to have a substantial credit profile that shows a higher credit score or rating.

The higher your credit score, the more likely you are to get approved for a personal loan in Singapore as it shows creditworthiness. As these credit reports are sourced from a credit bureau, you will also be able to source your own credit report by requesting a copy online or from Credit Bureau Singapore for $6.42.

2. Don’t apply for too many loans at once

For a smooth sailing loan application process, you have to ensure you do not have too many loans running at once. When you apply for too many loans at one go, lenders will raise an inquiry with the credit bureau to evaluate your creditworthiness. These can be considered hard inquiries where a lender is initiating a credit inquiry on behalf of the borrower.

Bear in mind that with each direct inquiry from a legal moneylender, there is a possibility that the loan evaluation process will be further scrutinised. Rather than having multiple credit inquiries, it is much more ideal to figure out the various types of legal loan options available and identify the right fit before applying for a loan.

3. Plan your budget before applying

As with all financial plans, it is best to budget well at the very beginning, before you even apply for a loan. This step is crucial to ensure that you can repay the loan on time to avoid late fees and extra charges. If you have a gauge on the range of monthly instalment payments that you are financially able to commit to, it will be much easier to choose the type of loan in Singapore.

Doing it this way would mean that you would already know the maximum interest fee you can commit to. Budgeting wisely also requires you to look at timelines to help you work out a comfortable repayment agreement or loan tenure.

4. Prepare substantial proof of income

You must have the right documents so that you can have a smooth sailing loan application process. These include your NRIC; proof of income and employment documents such as your last 3-6 months of payslip or income tax notice of assessment (NOA); current credit report; past CPF statements; proof of residence or tenancy agreement; employment letter; employment pass and bank statements (for foreigners).

It is usually not difficult to secure proof of income for employees having a monthly salary arrangement. However, other employment arrangements like commission-based work or self-employment may prove more complex for verifying future income. Regardless of the reason, it is usually a must for borrowers to find a way to prove that they will honour their debt.

If you are applying for a personal loan without formal proof of income, you can consider showing past bank statements that indicate regular payment from an employer or credit card statements to show that you have paid your bills on time. The credit history reflects your past credit management so it can be used as an indicator of creditworthiness. Documentation of annual tax returns from IRAS can also help your cause. You should also protect your credit score to get a higher rating. Lastly, you can also consider providing a larger amount of downpayment to secure a reasonable loan tenure.

Ultimately, applying for a personal loan in Singapore is not difficult. As long as you follow the tips above and ensure you have the necessary documents on hand, you will experience a quick and seamless application and approval process.

Interested in securing a personal loan in Singapore? Find out more about your legal loan options with us.


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