Five ways to improve your credit score

Concerned about your credit history? Here are some practical ways to boost your credit score going forward.

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If you have a low credit score and want to improve your chances of approval the next time you apply for a loan, there are steps you can take to increase your score. From checking your credit score to managing your accounts, you can use this guide to learn how to strengthen your financial history.

How to improve your credit score in 5 steps

If you want to apply for a credit card or loan but are worried about your credit score, there are some simple steps you can take to get your financial history back on track and improve your chances of approval:

1. Order a copy of your credit score and report

If you’re concerned with your credit score, you can confirm where you stand by ordering a copy of your credit file and credit score. You can order a copy of your credit report from Credit Bureau Singapore (CBS). Your credit score is usually a number between 1,000 and 2,000, which can give you an indication of your financial position.

If your credit score is low, you should review your credit report and look out for any incorrect enquiries or black marks (such as defaults or late payments) that are on your account.

Once you’ve reviewed your credit report and removed any incorrect information, you can review your financial accounts to get your money in order.

2. Maintain an active credit account

If you’re applying for a new line of credit, lenders are looking for evidence of healthy repayment behaviour to ensure you’re a responsible borrower. If you have no lines of credit open, you could have zero credit history which may also reduce your chances of approval.

If you don’t have an active credit card or loan, a postpaid mobile phone plan or utility account in your name can help you build your credit history. Make sure they are all registered to your name and address and that they’re in good standing (with no defaults).

3. Pay your bills on time to avoid negative listings

Paying your bills on time is a simple way to improve your credit file. If you have an overdue payment above S$200 for more than 90 days, it will be considered a default and remain on your credit report for three years. To avoid late payment fees, you should pay your credit card bill (for example) by the statement due date. But you’ll need to pay it within a 29-day period to avoid it remaining on your credit file for three years. Writs, judgments, bankruptcies, and clearouts are listed on your credit file for five years.

You can only remove a default from your account if it was incorrectly applied, so it’s best to nip them in the bud before they’re listed. If you struggle to keep track of your bills, set up a regular direct debit or automatic payment to pay your accounts on time. If you really can’t make a repayment, consider appealing to your lender for a hardship extension. You can usually negotiate an alternative and more lenient repayment plan if you explain your situation at an early stage.

4. Seek professional help from credit repair agencies

If you have found incorrect black marks or defaults on your credit file, you can contact a credit repair agency for help removing them. These agencies use legislation to determine whether any negative listings on your file were put there without a credit provider adhering to the relevant laws. However, these agencies can only remove incorrect listings from your file. You’ll also have to pay a fee to use a credit repair agency, so you’ll need to weigh up whether or not the cost is worth it before you start the process.

5. Avoid too many hard credit enquiries

Each time you apply for any form of credit, the financial institution will make an enquiry on your credit report. This is called a “hard” enquiry, as opposed to a “soft” enquiry where you request your own credit report. Too many hard enquiries can have a negative impact on your credit score. If your application is rejected, avoid applying for another product straight away. Instead, take the time to pay down your accounts so that your credit history demonstrates positive repayment behaviours.

Improving your credit score can take time, but there are some straightforward steps you can take to lift your score. If you’re considering applying for a line of credit but are worried about your credit score, request a copy of your credit score and follow the steps above to get started.

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