Personal Loans In Singapore For Bad Credit: How To Apply

Guest Contributor

Guest Contributor

Last updated 24 April, 2024

A bad credit score can prevent you from getting a personal loan. Here are the factors that impact your credit score, and how you can improve your chances when applying for a personal loan with bad credit.

Every borrower in Singapore has a credit score, which is as important as it sounds. 

Your credit score is a four-digit score ranging from 2,000 (the highest score) to 1,000 (the lowest). It is tracked and recorded by the Credit Bureau of Singapore, and serves as an indication of your creditworthiness, including the likelihood of defaulting on loans. 

Interestingly, licensed moneylenders in Singapore do not check Credit Bureau of Singapore for your credit score, but you will still need to satisfy other eligibility requirements. 

In any case, when you have a bad credit score, it becomes harder to get unsecured loans and credit  when you need it. Nonetheless, making a deliberate effort to improve your credit score will improve your chances of successfully getting a personal loan from a bank.

 

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What is a bad credit score and what causes it?

A bad credit score ranges from 1000 to around 1700, while a good one starts at 1900 to 2000. The first step in repairing bad credit is to know why your credit rating is poor and how to rectify it. Visit the Credit Bureau of Singapore to get your report, which will cost you S$6.42, inclusive of GST. Below is a summary of the different credit scores and the likelihood of default.

Score range Risk grade Min. probability of default Max. probability of default
1911-2000 AA 0.00% 0.27%
1844-1910 BB 0.27% 0.67%
1824-1843 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%

Here are some of the causes of bad credit.

 

Lack of credit history

If you have never taken an unsecured loan before, it does not mean you have a high credit score. There is no information to tell financial institutions whether you are good at repaying or not, which affects your eligibility as a borrower. 

However, not having a credit history does not automatically disqualify you from unsecured credit facilities; everyone needs to start somewhere afterall. When you do apply for your first credit card or personal loan, how you manage the payments afterwards will serve as an indication of your creditworthiness.

Late or partial payments

Late or partial payments signal that you are not able to meet your financial obligations, which brings down your credit score. Always strive to pay your unsecured loans and other financial obligations in full and on time.

Defaulting on loans

Defaulting on an unsecured loan means you fail to pay the loan, resulting in a loss to the bank. Failing to pay the loan may result in asset freezing, legal proceedings, and employment difficulties in finance or related sectors. It is best to ask the financial institution to restructure the loan instead of defaulting.


Multiple credit facilities

Making use of multiple credit facilities could mean you are overstretching your financial muscle. When you max out several credit cards in a row, it gives the impression that you can't manage your cashflow.

6 factors that influence your credit score

The credit report shows a summary of your credit history and repayment patterns. Below are factors that determine the credit score that appears in your credit report:

1. The number of loans you have taken recently

If you take too many unsecured loans, it gives the lender the impression that you are in too much debt and can't manage your finances.

2. Your monthly income vs debt

A higher debt ratio in comparison with your monthly income is an indication that you are not able to manage your finances. It means you are living beyond your means.

3. Account data

The data in your account shows your payment habits. If you make late payments, it shows you don’t have the financial discipline to manage your finances and monthly income.

4. Credit enquiries

Too many credit inquiries point to a desperate credit user. It's a sign that you are not financially savvy.

5. Available credit

Too many credit accounts may also point to reckless use of unsecured credit. . Consider debt consolidation to maintain one credit account.

6. Past transactions

Your spending habits show how responsible you are and your money management skills.

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SingSaver Exclusive Offer: Receive a Macbook Air 256 GB 13 Inch M2 Chip (worth S$1,613.80) or a Dyson V12s Detect Slim Submarine™ Complete (worth S$1,449) or a PlayStation 5 (Disc Version) (worth S$799) or a Dyson AM07 Tower Fan (worth S$459) or up to S$1,200 Cash when you get approved for a CIMB Personal Loan with a min. loan amount of S$8,000 and tenure of 3 to 5 years. Applicable to new customers only. Valid till 23 June 2024. T&Cs apply.

 

Tips to improve your credit score

It's possible to repair bad credit and increase the chances of getting a personal loan. Work on your credit rating to increase your chances of getting a loan when you need it. Below are simple steps you can take to repair your credit score.

Seek credit counselling

Start your debt repair journey by visiting a credit counselling facility. The counselling will help you identify the root cause of your bad credit and work out repayment plans with your creditors. Debt counselling in Singapore is offered by non-profit organisations that work with you to repair your credit.

Restructure your debt

Restructure your debt through a debt consolidation plan (DCP) or a balance transfer. Both will help you convert high-interest debt to low-interest debt, making it easier to pay.

Debt consolidation is restricted to those with high debt levels – where total unsecured debt exceeds 12 times their monthly income. It involves a provider paying your existing unsecured debts and consolidating them into one single repayment plan. 

A balance transfer works in the same way, allowing you to pay off high-interest debt with a lower-interest loan. Unlike a DCP, you may apply for balance transfers with low levels of debt.
 

Apply for smaller loans and use a repayment plan

A bad credit score will prevent you from getting large unsecured loans from financial institutions. You can start repairing your credit history by taking smaller loans, and most importantly, paying them off on time. Set up a repayment plan and budget your monthly income accordingly. 

Avoid multiple loans within a short time

Multiple loans show that you are credit-hungry, and don't know how to manage your cash flow. Organise your expenses to fit your monthly income to avoid taking on loans now and then.

In addition, avoid sending in too many applications for an unsecured loan, as that will give the wrong impression. After an application, take your time before submitting another one.

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How to apply for a loan when you have a bad credit history

In this section, we look at steps you can take to ensure you get the cash flow you need despite your bad credit history. Here is what you can do to reduce the chances of getting a rejection.

1. Find out your current credit rating

Knowing your credit rating beforehand gives you an idea of what you can expect. If your credit score has been rising steadily, it shows you are working to rectify your history. It gives the lender the impression it's a work in progress, increasing your chance of getting a loan.

2. Keep your income-to-debt ratio in check

Before you apply for the loan, make sure you will be able to pay for it. The income-to-debt ratio shows the amount of income that goes into paying debts. It shows whether you can sustain your debts while living comfortably.

3. Find out the loan criteria from various banks

Different banks have varying loan provision criteria. Although they have similar terms and conditions, it's best to research and know what each loan package requires. In doing so, you will apply for the loan with insight. You will have all the documents ready to avoid the back-and-forth that could result in a rejection.

It's also good to check the interest rates various banks offer to avoid surprises later. Look for banks that offer fixed interest rates and see if you qualify.

4. Apply one after the other

Don't be tempted to put all the loan applications together at once. Review where you have the best chances and start there. Put in your applications and wait for the review process to be completed before you try another one. A mass application for credit implies that you are hungry for credit.

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Best personal loans for persons with bad credit scores

A bad credit score can make it hard to access cash from banks. We look at the best options for you.

CIMB Personal Loan

CIMB Personal Loan offers one of the lowest-cost personal loans packages around, with interest rates starting from 2.80% p.a. (EIR from 5.28% p.a.). While there is a 1% processing fee, this is waived off for loans S$5,000 and above. 

The minimum annual income requirement for Singapore citizens and Singapore PRs is S$20,000. You can also choose between tenures from one to five years and borrow up to 8x your monthly income, capped at a maximum of S$200,000. 

 

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Citi Quick Cash

Citi Quick Cash offers quick cash with a repayment of up to 60 months. Interest rates start from 3.45% p.a. (EIR 6.5% p.a.) and there is no processing fee, making it one of the cheapest loan packages on the market. 

You can borrow up to 4x your monthly income, or up to 8x if your annual income is S$120,000 and above. The minimum loan amount is S$1,000 and the minimum annual income requirement is S$30,000 for Singapore citizens and Singapore PRs, and S$42,000 for foreigners. 

 

Standard Chartered CashOne Personal Loan

One of the best options for consolidating debts is the Standard Chartered CashOne Personal Loan because it allows you to borrow up to 4x your monthly salary, up to S$250,000.

You can enjoy low interest starting from 2.88% p.a. (EIR 5.84% p.a.), with a one-time processing fee of S$199. 

The loan tenure available is from one to five years. Singapore citizens and Singapore PRs need a minimum annual income of S$20,000, while foreigners need an annual income of at least S$60,000. 

We have the best debt consolidation plans to help you improve your credit rating. Sign up for these personal loans and enjoy low interest rates. What's more, you can enjoy exclusive offers and welcome gifts.

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Singsaver Exclusive Offer: Receive the following rewards when you apply for an SCB CashOne Personal Loan.

New Customers: Receive an Apple iPhone 15 128GB (worth S$1,311) or a Dyson Purifier Cool Air Purifier TP07 (worth S$909) or an Apple iPad 10th Gen 10.9 64 GB (worth S$529) or a Dyson V8 Slim Fluffy (worth S$509) or a Nintendo Switch Gen 2 (worth S$399) or up to S$1,040 eCapitaV upon loan approval when you apply for a minimum loan of S$8,000. Valid till 30 June 2024.  T&Cs apply.

Existing Customers: Receive up to S$520 eCapitaV upon loan approval when you apply for a minimum loan of S$8,000 with a tenure of 3 to 5 years. Valid till 30 June 2024. T&Cs apply.

Plus, enjoy up to S$4,100 cashback when you apply for a min. loan of S$12,000 with a tenure of 3 to 5 years. Valid till 30 September 2024. T&Cs apply.

 

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HSBC Personal Loan

HSBC Personal Loan offers a loan tenure of one to seven years, giving you more time to pay off the loan. It also comes with interest rates as low as 2.92% p.a. (EIR 5.5% p.a). However, there is a 1% processing fee of the approved amount (minimum S$88). 

You can borrow up to 4x your monthly salary, but those earning at least S$120,000 per year can borrow up to 8x their monthly salary (capped at S$200,000). 

The minimum loan amount is S$1,000, and approval time of up to five working days should be expected. 

SingSaver Exclusive Promotion: Enjoy the following rewards when you sign up for an HSBC Personal Loan:

Receive an Apple iPhone 15 Pro 256GB (worth S$1,825.75) or an Apple Macbook Air 256GB 13 inch (M2 chip) (worth $1,613.80) or an Apple Bundle (worth S$$1057.60) [Apple iPad 10th Gen 64GB (worth S$691.60) + Apple AirPods Pro Gen 2 (worth S$365.70)] or a Dyson AirWrap 2.0(worth $859) or Dyson V8 Slim Fluffy (worth $509) or up to S$700 eCapita Vouchers when you get approved for a loan of min. S$10,000 with tenure of 3 to 5 years. Valid till 30 June 2024. T&Cs apply.

 

UOB Personal Loan

UOB personal loan comes in handy if you are pressed for cash. The bank offers instant loan disbursement for online applications made between 8am to 9pm. 

The interest rate on this loan package starts from 2.88% p.a. (EIR from 5.43% p.a.), with no processing fee charged. You are also entitled to a cash rebate ranging from 0.5% to 2%, depending on the approved loan amount. 

Meanwhile, the available loan tenors are 12, 24, 36, 48, and 60 months, and the minimum annual income for Singaporeans and Singapore PRs aged 21 to 65 years old is S$30,000. 

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Read these next:

All The Legal Loan Limits You Need To Know About In Singapore

What Really Happens If You Skip Credit Card Bills, Loan & BNPL Payments

Four Types of Personal Loans: What You Need to Know

4 Times In Life You Should Consider Getting a Personal Loan

What’s The Difference Between Loan Sharks And Licensed Moneylenders?

FINANCIAL TIP:

Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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