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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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.

Your personal loan in Singapore was approved by a licensed moneylender – congratulations! Now comes the challenging part – sticking to the repayment schedule. There are two reasons why it is important to repay your loan as scheduled.

Firstly, there are monetary penalties every time you are late on a payment. This includes:

  • A one-off late payment penalty every time you fail to pay the monthly instalment by the set date. This fee is capped at $60 per month.
  • Interest on the amount due. This is calculated at up to 4% of the amount due for that month (not the outstanding loan balance).

Secondly, the cumulative debt that you incur as a result of these penalties makes it more likely that you will default on future payments. Remember, a failure to meet your financial obligations today can have catastrophic effects on your credit rating for years to come.

But not to worry, we have got your back! Here are 4 simple and proven ways you can use to adhere to your personal loan repayment plan.

1. Adjust the instalment due date

If you are employed full-time and have a constant monthly stream of income, it is important to keep your payday in mind when it comes to repaying your personal loan. Also consider last-minute purchases and emergency expenses, which will affect your repayment schedule.

Once you have a clear idea of when you receive your salary every month, approach your licensed moneylender and ask for a revised due date for your monthly instalments. As there may be administrative expenses involved with the amendment, it is best to be absolutely sure before informing your lender.

2. Know your finances

This method is all about how well you know your finances. Before you can even determine a feasible repayment plan for your personal loan in Singapore, you need to first assess your current income and expenses.

While there are many free apps today that can help ease the burden of recording your daily personal finances, you still need the discipline to keep this habit consistent. Just think of how invaluable this information will be in helping you see where your money is going and how you can cut back on unnecessary expenses in time for your next repayment.

3. Prioritise your debts

Now that you know where to cut back on expenses, the next step is to determine where your income will go. All debts are not created equal and you have to determine the order of which gets paid first and that depends on two factors:

  • Size of each debt
  • The interest rate on each debt

Together, they dictate the amount by which your debt increases if you do not pay them in full. The idea is to gradually climb out of the debt by ensuring that you either maintain or reduce the amount owed.

You can use either the debt snowball or debt avalanche strategy to accelerate debt repayment.

Debt snowball – List all your debts – from smallest to largest – and make the minimum payment every month to prevent further increase in debt. Pay off the smallest debt first as best you can, and make minimum payments to the remaining debts with any money left. Over time, you will pay off that debt, and you can apply the same strategy to the next smallest debt.

Debt avalanche – List all your debts and make the minimum payment on all debts every month. Pay off the debt with the highest interest using any money that remains. Over time, you will pay off that debt, and you can apply the same strategy to the next high-interest debt. In this way, you are essentially decreasing the amount of interest you are paying.

4. Be mindful of your spending

Last but not least, budget carefully. Before taking out a personal loan in Singapore, be sure to assess your current spending and ensure that it doesn’t clash with your repayment plan. This comes with some financial planning and discipline.

If you realise you’re someone who tends to overspend, then it is time for some serious introspection on your finances and addresses the true cause of perpetually being in debt. How you spend is in your control and it is one of the best long-term solutions to having a solid financial future.

Good thing is, we’re here to help you.

Galaxy Credit is a licensed money lender that specialises in helping you secure a personal loan in Singapore. Talk to us today about our loan solutions.


When applying for a personal loan in Singapore, you need to ensure you have all the documents required to get a loan. You should be aware of the documents that are needed and know how much you can borrow. Having your income details and proof of employment on hand will certainly help with your application.

The documents that are required will depend on the bank or moneylender you choose but generally, they will require these essentials:

  • Proof of Income
  • ID copy
  • Employment information, like Employment Pass or CPF statement.

Proof of Income

If you want to borrow money from banks or financial institutions then an income statement will be required. The bank will ask for your income level and salary details so they can check if you qualify for a certain amount of loan.

In short, documents you may need for proof of income includes:

  • Contribution statement to your Central Provident Fund (CPF)
  • Latest income tax Notice of Assessment
  • Latest computerised payslip
  • Bank statement showing salary crediting into your bank account
  • Other income statements as required

ID copy

If you are applying for a personal loan, the lender will ask for a photocopy of your identification card, like your NRIC or Employment pass card just to confirm your eligibility and legal status.

Employment information

If you are applying for an employee loan, then the lender will ask for your employment details such as your Employment pass card or CPF statement. The lender might also ask for proof of employment like an employment contract, job offer letter, and details of salary and bonus.

Tips to secure a personal loan in Singapore

You should carefully evaluate your current financial needs and your earning power. Plan and record your monthly budget and expenditure to establish a monthly repayment plan that you are comfortable with.

Loan Amount

This is the most important factor to consider when applying for a personal loan in Singapore. Knowing the correct amount of loan required will allow you to choose the right type of personal loan. It is also important that you obtain the lowest personal loan rates that suit your needs and try not to surpass your borrowing limit.

Loan Tenure

The loan repayment period is also crucial in determining the length of time you have between monthly instalments. Ideally, you will plan to quickly repay your personal loans and avoid incurring late payment fees and an accumulation of unwanted debts. Remember, the inability to repay your loans on time and in full will eventually affect your credit score.


Besides the obvious interest rate fees, there are also processing fees charged by both banks and moneylenders to process your loan application. Do check thoroughly to determine if other hidden fees are involved as they will affect your total loan amount. Also, clarify on late payment fee charges and their late payment interest rates before signing anything.

Avenues for personal loan promotions

Sometimes, there are special loan deals offered by both banks and licensed moneylenders. Banks, which are typically the big players in Singapore’s finance hub, often advertise personal loan promotions on an ad-hoc basis via their websites, newspapers, financial sites, or social media platforms. Licensed moneylenders, on the other hand, advertise their services on their corporate website, business directories, or via posters at their registered offices.

If you are looking for a flexible and affordable loan in Singapore, visit Galaxy Credit. We offer the lowest interest rates on our loans and have a quick approval process. We have personal loans to cater to your needs. Talk to us and we will help you fill out an online application!