Bad Credit Loans in Singapore: A Guide for Getting Approved with Poor Credit Scores

By Wally Wong Bad Credit Loans in Singapore: A Guide for Getting Approved with Poor Credit Scores | Published 09 Feb 2024 4 minutes


At a glance

This guide offers an in-depth look at securing personal loans in Singapore for those with poor credit. Read this guide to find out how to understand and improve your credit score, including factors such as credit history, payment patterns and multiple credit facilities. It also gives you practical strategies for enhancing loan approval chances, such as avoiding mass applications, opting for smaller loans and using licensed moneylenders. Additionally, you’ll learn ways to improve bad credit through timely loan repayments, debt restructuring, balance transfers, credit counseling and limiting open credit facilities.


Seeking a personal loan with a low credit score? Securing a personal loan in Singapore can be challenging with poor credit. A subpar credit score often negatively impacts financial institutions and banks, affecting your borrowing capabilities.

But unfortunately, bad credit can affect anyone. Its circumstances may arise from job loss, past financial missteps, or unforeseen medical expenses, leading to debt accumulation and credit score damage. When such unexpected financial crises happen, it can seem like there is no way out.

However, there are always solutions.

Even if securing a personal loan in Singapore seems daunting due to your poor credit, there are strategies to enhance your situation and boost the likelihood of loan approval.

Continue reading to discover the options available to you!

Understanding Bad Credit

First, let’s unpack the meaning of a “credit score”.

Consider this scenario: If someone asks you for a loan, you’d likely agree only if you trust them. Financial institutions operate similarly.

Lenders rely on your credit score to assess trustworthiness, as they don’t know you personally. Your credit score, derived from your credit report, summarizes your credit history and repayment behavior. Now, let’s examine the factors affecting your credit score:

  • Number of recent loans: Multiple loans can suggest financial distress, raising lender suspicions.
  • Credit utilization pattern: High credit relative to income might indicate poor financial planning and overspending.
  • Account delinquency data: Late payments signal potential unreliability in timely repayments.
  • Past transactions: Sudden changes in spending patterns can raise concerns about financial stability.
  • Available credit: Excessive credit accounts, particularly credit cards with high-interest rates, can lead to debt accumulation.
  • Enquiry activity: Frequent credit applications can be perceived as signs of financial desperation.

This information helps lenders determine your borrowing capacity and appropriate interest rates. Banks typically use Credit Bureau Singapore (CBS) scores in Singapore, while licensed moneylenders rely on the Moneylenders Credit Bureau (MLCB). Look at the credit score table created by CBS:

Score Range Risk Grade Probability of Default
Min Max
1911-2000 AA 0.00% 0.27%
1844-1910 BB 0.27% 0.67%
1825-1843 CC 0.67% 0.88%
1813-1824 DD 0.88% 1.03%
1782-1812 EE 1.03% 1.58%
1755-1781 FF 1.58% 2.28%
1724-1754 GG 2.28% 3.46%
1000-1723 HH 3.46% 100%

A low credit score implies a higher risk of defaulting on loans, leading to potential rejections by banks. Interestingly, MLCB scores, based on data from licensed moneylenders, may differ from CBS scores, offering alternative borrowing options.


Important info

A CBS Score Between 1,000 and 1,723 Indicates Poor Credit

Your financial history is translated into a CBS credit score of 1,000 to 2,000. A higher score suggests better credit. According to CBS, scores between 1,000 and 1,723 are considered poor. This score can be obtained from CBS and MLCB reports.

Source: Credit Bureau Singapore

Root Causes of Poor Credit

To improve your credit score for a personal loan in Singapore, understanding its underlying causes is crucial.
Obtaining a credit report from CBS for about S$6.50 can shed light on factors impacting your credit score. Let’s look at the factors:

  1. Lack of Credit History: Contrary to popular belief, having no loans can lower your credit score due to the absence of a repayment track record. So if you have never taken any loans, it does not mean you’ll have a high credit score. Financial institutes need to know whether you are good at loan repayments. They use credit cards or pre-existing loans to determine your financial standing. So having a track record of these:
    • Timely repayments
    • Full installment payments

    Not only show you’re a loyal customer of a certain bank but also show that you can pay your loans.

  2. Late Payments: Consistently late or partial payments signal repayment unreliability. However, there might be errors in your credit reports even if you’re extremely timely with your repayments. Poor programming is to be blamed, so you always need to check your credit reports. Always verify your credit report for inaccuracies and dispute any errors quickly.
  3. Loan Defaults: Loan defaulting adversely affects your credit history, leading to significant financial and legal repercussions. To default on a loan means not paying it, so the bank has to write it off as a loan. This will be reflected in your credit history, with repercussions like:
    • Inability to find work in the financial sector,
    • Having your cash and tangible assets taken away, especially those you used as collateral for the loan,
    • Losing what you bought with the loan
    • And, of course, being unable to get a new loan

    The legal proceedings and emotional stress of loan defaults are not worth it, so do speak to your bank if you need to restructure your loan or pay the interest until you can make full repayments.

  4. Multiple Credit Facilities: Numerous credit lines can indicate financial overextension and poor management skills. This means that you take on many credit cards. Don’t fall prey to attractive promotions; ask yourself if you need a credit card before applying.

Here are some tips to remember before you apply for another card:

  • If you max on your credit card, it appears to financial institutes that you have poor financial management.
  • Banks compare your earnings to your outstanding credit.
  • When you apply for multiple loans, it makes you seem in need. It does not increase the chances of getting one.
  • If you take too many loans at one time, the financial institutes will see it as poor money skills and living beyond your means.
  • For those with multiple cards for spending at specific merchants, it appears to the banks that you’re just interested in perks but do not know how to balance your spending.

Improving Your Loan Approval Chances with Bad Credit

Now that you understand bad credit and its causes, let’s explore how to enhance your loan approval odds.

  1. Avoid Mass Applying: Submitting numerous loan applications simultaneously can show the banks that you are desperate and financially strained. There is a possibility that they might conclude you are in a financial crisis,need money and may not be able to pay the loan. So despite the extremely attractive loan promotions, do not make the mistake of submitting multiple loan applications to different banks in the same three weeks. It can also lower your credit score.
    Instead, space out your applications over several months and only reapply if your initial attempt is rejected. Most importantly, do your research about the bank, your loan and other details before you apply. This approach demonstrates responsibility and reduces the impression of financial desperation.
  2. Opt for Smaller Loans: Smaller loan amounts have higher approval rates. If you have a poor credit score, getting a big loan of $10,000 is harder. Banks are more willing to extend a small loan of $4,000. So whatever your amount in mind, lower it and ask for a smaller amount.
    Requesting a lower amount shows financial prudence and improves your chances of approval. Successfully repaying small loans can also help rebuild your credit score.
  3. Seek Licensed Moneylenders: Avoid unlicensed lenders and loan sharks. Loan sharks charge exorbitant hidden fees and resort to extreme means such as harassment to get their money back. Plus, it is illegal to borrow from a loan shark in Singapore.

Licensed moneylenders may offer more flexibility for those with bad credit. These lenders often have their assessment criteria to assess your creditworthiness. So if you are rejected from a bank due to your low credit score, try . Also, interest rates are capped at a maximum monthly interest rate of 4%.

Addressing Bad Credit in Singapore

Improving your credit score is a gradual process that requires consistent effort. Here are some strategies:

  • Timely Loan Repayments: Regularly paying off existing debts on time is crucial. Avoid spending on unnecessary items and steer clear of late fees. Be disciplined and put your earned money into repaying your loan. It might feel unpleasant to miss nights out at a bar or the latest mobile phone, but this demonstrates financial responsibility and commitment to clearing your debts.
  • Debt Restructuring: Negotiate with lenders for more favourable repayment terms, like extended loan tenures or reduced interest rates. Sometimes, extending the loan tenure may lead to higher interest rates. But this is better than defaulting on your own. Debt restructuring can prevent loan defaults and improve your credit standing.
  • Balance Transfers and Debt Consolidation: A balance transfer which lets you consolidate credit card balances into a zero-interest account for a period of time. Another method is a debt consolidation plan, combining numerous loan repayments. That way you just need to make one payment monthly for several loans, without missing a loan repayment deadline. These options allow you to consolidate multiple high-interest debts into a single, more manageable loan. This can simplify repayments and help improve your credit score.
  • Credit Counseling: Seek professional guidance to restructure your debt and develop better financial habits. Organizations like Credit Counselling Singapore offer valuable resources and counseling sessions.
  • Limit Open Credit Facilities: Reduce the number of active credit accounts. You should not have more than three credit facilities. This minimizes the risk of overspending and helps focus on clearing existing debts. Make sure you repay all credit cards and loans or make rearrangements for those you cannot pay on time. More than three open credit facilities can cause you to forget repayment deadlines, which increases your credit score. Banks may also think you are credit-hungry. Besides, credit cards also charge annual fees. So why incur that unnecessary amount? Stick to just three open credit facilities, which is more than enough for your daily needs.

In conclusion, while bad credit can pose challenges in obtaining personal loans in Singapore, viable strategies and resources are available to improve your financial standing and increase your chances of loan approval. By understanding the causes of bad credit and actively working to improve your credit score, you can navigate the lending landscape more effectively. Always approach reputable and licensed moneylenders and avoid unlicensed lenders at all costs.

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