What is a credit score?
A Credit Score is a number used by lenders as an indicator of how likely an individual is to repay his debts and the probability of going into default. It is an independent assessment of the individual’s risk as a credit applicant.
Banks use score reports provided by Credit Bureau Singapore (CBS) in Singapore to decide if they should loan you money.
Why do we need to build our credit score?
Whether you are just getting into a new home or are looking for a tenth investment, your credit score is important. This plays a large part in helping you qualify for the amount of money you want and need. By keeping up with your credit score and understanding how it will tie into your investment, you can be sure to benefit from the points that you have.
Before you get involved in a loan, you will want to check your credit score to ensure that you can get the loan you want. You can buy your report from CBS or get an IPA from your banker.
What is an IPA?
It stands for In-Principle Approval. An IPA is a computation of your maximum loan eligibility from a bank. Hence it is more accurate and allows you to plan your finances confidently.
Credit scores will affect your loan because it helps you be pre-approved for a loan. Lender companies will be more willing to work with you if you score higher. They will also be able to give you a higher amount of money. This usually means that you are responsible for keeping up with your payments, have a good history, and how you have handled things such as overdue payments. For some, this is the only way that loans will be approved. For others, other factors will be considered, such as financial stability, income and job status. Before even beginning the process of finding real estate, you should ensure that these are in the right place.
By adding up the points, you can also add up the abilities that will take place with your loan. Understanding the various elements of your credit score can help you save money and time and get approved for the loan you want. Simply adding it all together will be where you want to start building your credibility.
As a property investor, it is a good practice to regularly watch your credit score so that you are ready to jump into an opportunity when it comes.