It isn’t easy getting a personal loan (Singapore). Bad credit will make it harder for anyone to receive loan approval from banks. Unfortunately, banks and other financial institutions use credit history and scores to measure your financial capability to repay the loan you will take out with them. However, banks aren’t the only institutions that can help you secure financing.
Some institutions like licensed money lenders can help anyone get personal loans in Singapore even with your bad credit history. Most will ask you to prove your current income, and you can receive financing within a few days to a week. However, before you venture into moneylending, take the time to know how you can restore your bad credit into the positive side of things.
Easy Ways to Recover From Bad Credit
Bad credit is not permanent. You can quickly reverse your bad credit by repaying your financing with interest in full. It might seem impossible when you’re juggling multiple debts with high-interest rates. A single missed payment will have cascading effects, making it harder for you to recover.
However, a solution is always present. Declaring bankruptcy should be your last resort because you can only declare it once every six years, and it can leave a negative effect on your overall credit score.
Here are four easy ways to get you through bad credit into the good side of Singapore’s financial industry without having to declare bankruptcy.
Pay Your Loans With Highest Interest Rates First
If you have an outstanding loan in Singapore with a high-interest rate that you’ve missed several times, it’s better to repay them first. If possible, delay some of your lower interest rate loans and focus upon the high-interest rate loans first.
The logic of doing this is simple: the high-interest rate debts can balloon into higher figures when you compare it to the inflation low-interest rate debts will reach. For example, multiple repayments of low-interest rate debts can be equivalent to just one single high-interest debt repayment.
Avoid Using Credit Cards to Pay Loans
One major mistake of most Singaporeans and foreigners repaying their loans is using credit cards to repay their debts. Credit cards have higher interest rates than a loan, mortgage, and even business financing.
If you can repay your credit cards in full per month while using them to pay for your personal loans, then it’s a great and convenient way to pay. However, if you’re not mindful of the interest rates your card has — which might be higher than your current debt’s interest rates — and you can’t repay your credit card debt on time, then it’s an unsustainable way to settle your debt leading to even worse bad credit.
Look At Your Current Financial Disposition
You’re already deep in debt and have a bad credit score. Taking out a high-interest rate, unsecured loan, and a small amount won’t help your financial disposition unless you have a plan for the money. Therefore, it’s better to maintain the status quo, repay your current debts, save enough and bear lower savings, until you get out of debt. In doing so, you start with a clean slate, a better credit score, and more opportunities for better financing.
Get Help Through Debt Consolidation
Debt consolidation is your first opportunity to get your credit score back on track. Most licensed money lenders offer debt consolidation services. They will pay for all your outstanding debt to prevent your interest from increasing. Then, they’ll turn all their repayments into a single low-interest debt that you can pay for within a set amount of time or until completion.
Getting a Personal Loan On Bad Credit
Ask Money lenders About Their Personal Loan Offers and Promotions
In Singapore, a licensed money lender like GM Creditz do not consider your bad credit score as an important part of your loan application. They’ll ask you for proof of your employment and income. In fact, even foreigners with bad credit scores in their home country could ask for the best personal loan (Singapore) on bad credit. Bad credit scores aren’t a factor for money lenders to lend you money.
Submit All Required Documents
Almost every licensed moneylender has the following requirements for personal loans Singapore:
- Letter of employment offer
- Recent payslip from employer
- Existing tenancy agreement
- Net income per month (excluding taxes, utilities, and debt repayments)
Once you submit all documentation proving the information, your licensed moneylender can gauge your capability to pay back your financing in full. Furthermore, they can create different payment plans based on your income, giving you the capacity to pay your loan in full and without any problems.
Make Yourself Available For Possible Personal Interviews
Most money lenders won’t ask you for an interview, but some might make an exception and ask you to come in and discuss your loan terms in person. They might ask you a few questions about your employment, plans with your current occupation or career, and other questions they consider to be important details. Normally, this is just to get a feel whether you’re a dependable borrower that can repay their financing on time and in full.
Right after the interview or one or two days thereafter, the money lender might release the cash immediately. Some are likely to approve your application on the same day or a day thereafter.
Use Your Personal Loan Wisely
You’ve got an opportunity to invest your financing into something productive. Make sure it isn’t for a vacation if you’re heavily indebted. If you’re taking out a personal loan for a celebration, then make sure to plan only within the loan amount you’ve borrowed. It’s easy to get carried away when you have instantly but temporarily own a huge sum of money and make brash and destructive financial decisions.
Before taking out a personal loan, always have a plan and follow through your repayments in full to avoid huge interest rates. In doing so, you can achieve your goal to clear your bad credit and avoid being indebted to money lenders too.
It’s Not Difficult to Find Loans on Bad Credit at All!
Singapore’s Ministry of Justice heavily regulates money lender activity across the country. This ensures you’re not working with loan sharks that have no centralized terms and can prey on the vulnerability of borrowers with poor credit. With money lenders, you’re working with an institutionalized system that protects both sides equally through the existence of laws.