Contributed by Credit Bureau Singapore
You may have already read this article beforehand if the top item on your to-do adult checklist is to apply for a Credit Card after you have graduated. However, do you know that there are more things to consider than just choosing the most incredible card design and a card with the most benefits? In the previous article, we briefly talked about Credit Score and Credit Reputation. Hold up – what are these confusing technical jargons? Don’t fret! This article will help to address your headaches.
Who is Credit Bureau Singapore, and what is a credit report?
Credit Bureau (Singapore) Pte Ltd (CBS) is Singapore’s most comprehensive consumer credit bureau, with full-industry uploads from all retail banks and major financial institutions. It collects various kinds of credit-related information amongst participating members or credit providers and compiles it into a report known as the Consumer Credit Report. The types of credit data that CBS collects range from Credit Cards, Personal Loans, Overdrafts, Mortgages and Vehicle Loans.
A credit report can assist credit providers in their risk assessment capabilities and, at the same time, protect every consumer’s credit profile by providing objective and factual information collated by our members. To put it simply, lenders use credit reports to determine the likelihood of the customer repaying so that they can make better lending decisions quickly and more objectively before extending a loan to the individual. It is a detailed record of your credit history and includes detailed personal information, information about credit accounts and public records.
Every individual who has applied for a credit facility in Singapore will be given a credit score in their credit report. A Credit Score, or Bureau Score, is calculated from an algorithm based on information in your current available credit data and is a fluid number that may change from time to time in tandem with changes in your credit information. Lenders will assess the Risk Grade and Probability of Default to determine if you are a high-risk borrower.
You can view the credit report somewhat like a student report card, meaning that your entire credit history in Singapore will be recorded in your credit report, whether good or bad.
How will this affect me in the future?
Credit providers use the credit report to assess a complete risk profile of a customer before deciding if they should extend the loan facility to them. Suppose the customer presented a more high-risk credit report with a poor credit score. In that case, they are likely to have lower chances of getting approved for a new loan, indicating a higher probability of defaulting on future payments.
CBS has also evolved to provide employers with reliable credit screening tools to make well-informed hiring decisions. This provision is especially relevant for banks and financial institutions as they are closely regulated by the Monetary Authority of Singapore (MAS). Under MAS’s Guidelines on Fit and Proper Criteria, be it an institution, exempt financial institution, exempt entity or a fund management company, they are obligated to do employment checks, including credit checks on pre-hires.
Why do employers check your credit report?
Companies aim to recruit the right people to eliminate any unnecessary performance distractions (for example, employees who stress over outstanding debts and loans). Therefore may potentially lead to disciplinary action that might reduce the efficiency and productivity of the work. At the same time, more or less financially stable employees will be able to focus better on what is relevant to accelerating the company’s growth.
Employers can filter out any adverse payment history or possible recent law litigations and bankruptcy records through the candidate’s credit reports. Poor credit score or report indicates that the employee might be financially irresponsible and also serve as an early warning sign to prevent companies from hiring potential data mongers who might seriously damage the company’s reputation in the future.
Maintaining a good credit reputation is just like having a good resume. It is especially vital for fresh graduates or job seekers as some employers will choose to conduct credit checks during pre-employment screening. Follow and like our Facebook page @creditbureausingapore for more helpful content and tips to maintain a good credit score, or visit the Credit Bureau Website at https://www.creditbureau.com.sg/ to get a copy of your credit report.
