Your credit report is the lender's memory of you

You will be able to explain what a Credit Bureau Singapore report records and how lenders use it when you apply.

The first time most people think about their credit record is when a bank turns them down. A card application comes back rejected, or a car loan is offered at a worse rate than a friend got, and nobody explains why. The explanation is usually sitting in a file you have never read.

When you apply for a credit card or a loan in Singapore, the lender almost always checks your report with Credit Bureau Singapore, usually shortened to CBS. CBS collects credit information from its members, which include the banks and finance companies you borrow from. Every month, those lenders report what you owe them and whether you paid on time. CBS keeps that history and gives it to any member lender you apply to, with your consent, which you give when you sign the application form.

So your credit report is a lender's memory of you. It lists the credit accounts you hold, such as cards, personal loans, car loans and home loans, along with their limits and balances. It shows your repayment record month by month: paid on time, paid late, or not paid. It shows defaults, where a lender has given up waiting and written the debt off or passed it to collections. And it shows enquiries, which are the times a lender has checked your report because you applied for credit.

On top of the details, CBS gives you a risk grade. This is a single letter grade, from AA at the low-risk end down to HH, that estimates how likely you are to fall seriously behind on payments. Lenders use it as a quick filter. A strong grade does not guarantee approval, and a weak one does not guarantee rejection, because each bank adds its own rules, such as your income and how much you already owe. But a weak grade makes every yes harder and every rate higher.

Notice what is not in the report. Your salary isn't there, and neither is your savings balance or your CPF. Paying your rent on time doesn't show up, and nor does settling your phone bill in full. The report only knows how you have handled credit from lenders who report to CBS. Someone who has never borrowed at all can look riskier than someone who borrows and repays steadily, simply because the lender has nothing to go on.

This leads to three practical points. First, the report is about behaviour, and behaviour can change. Late payments hurt, but a run of on-time payments afterwards slowly repairs the picture. Second, mistakes happen. An account you closed may still show as open, or a debt you settled may still show as outstanding, and you can only dispute what you have seen. Third, applying for a lot of credit at once leaves a trail of enquiries, and a lender reading that trail may wonder why you need so much so quickly.

You'll learn in lesson 1.3 what tends to move a risk grade and in lesson 1.4 how to get a copy of your own report. For now, think about the record you have been building without looking at it. Which cards and loans have you held in the past few years? Have you ever paid a bill a few days late and shrugged it off? Did you apply for several cards in one month to collect sign-up gifts?

Your task before the next lesson: list every credit card, loan, credit line and instalment plan you have held in the last three years, open or closed. For each one, note the lender, roughly when you opened it, and whether you can remember ever paying late. Keep the list. When you read your actual CBS report later in this module, you will compare the two and look for anything that is missing, wrong or a surprise.

List every card, loan, credit line and instalment plan you held in the last three years, with the lender and any late payments you remember.

Course

• Credit and debt: scores, cards, loans and BNPL