As a result of improved economic sentiment, the default rate on mortgages has almost halved from 0.5% in March 2008 to 0.29% in March 2010, according to statistics from Credit Bureau (Singapore), Singapore’s consumer credit bureau. A loan is classified as default when it is 90 days past due.

The statistics also show that consumers aged 50-59 have overtaken younger borrowers as the group with the highest mortgage default rate in March 2010. The 50-59 age group’s default rate stood at 0.45% in March 2010, down from 0.63% in March 2008. In contrast, consumers aged 21-29 had a default rate of 0.27% on their mortgages in March 2010. In March 2008, these young consumers had the highest percentage of defaults at 1.05%.

While mortgage defaults and perhaps even other types of consumer debt may be down as a result of the better economy, consumers should not be complacent. How can older and younger consumers enhance their credit reputation and manage their payment patterns to improve their credit worthiness so as to secure future borrowings?

Here are some tips which consumers can adopt to enhance their credit reputation:

Enhancing Credit Reputation:

The factors that are likely to influence the outcome of your credit application includes:

•    Payment conduct – Payment history is a very important factor in determining your credit score. Since recent history carries more weight than what happened five years ago, getting in the habit of making on-time payments is an incredibly powerful way to improve your credit rating.

•    Number of credit facilities owned – Avoid multiple sources of credit. It is more manageable to keep track of 2 credit cards than 10.

•    Outstanding account balances – Lenders like to see plenty of breathing room between the amount of debt reported on your credit cards and your total credit limits. The more debt you pay off, the wider that gap and the better your credit rating.

•    Record of bankruptcy proceedings – Bankruptcy is the most catastrophic impediment to your good credit reputation, far worse than delinquencies, loans or collections. Its impact, however, is dependant on how many defaults you made on your credit before you filed.

Credit Bureau (Singapore) (CBS) would like to encourage consumers to obtain a copy of their personal credit report so that they can better understand the type of information that banks and financial institutions view when they retrieve their credit file.
    

To ensure the completeness and accuracy of your credit report, consumers are strongly advised to review their reports regularly to avoid any misinterpretation of your credit history. Some areas of dispute could fall under:

•    Account Status
•    Previous Enquiries
•    Overdue Balances

Upon receipt of such disputed notice, the privacy team in CBS will commence an investigation in consultation with the Member who has provided the information.

CBS is the only Consumer Credit Bureau in Singapore that has a full-industry upload by all card issuing banks and financial institutions in Singapore. Today, CBS, which is an associate company of The Association of Banks in Singapore, has 23 member banks and financial institutions. For a full list, please visit www.creditbureau.com.sg.

Quote Promo Code LG010311 to enjoy 10% off Credit Report (Usual price at $5) and My Credit Monitor (Usual price at $35) when you sign up via www.creditbureau.com.sg with your SingPass.

For more information, call CBS hotline at 6565 6363 or email consumer_services@creditbureau.com.sg.