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Landon Diaz
Landon Diaz


However, research by CreditSmart found less than 50% of us know that credit reports are also used by telcos and utility providers when we apply for a new mobile phone contract or open a new gas or electricity account.


You may have closed some of your credit cards or even pre-paid a large value loan you had previously taken, but this act of yours would not have been reflected in your credit report. This depends on how often your creditor reports to the credit bureaus. If your credit report has not been updated at the time of your application, then there is a chance it will get rejected.

Applying too many credit cards at the same time may show that you are having financial trouble or you are taking on too much credit. The first 2 credit card issuers checking your credit report and approving your credit card application may happen, but the subsequent enquiries by other banks will result in rejections. Though enquiries will not affect your credit score by much, rejections will have a more adverse effect.

A credit report also includes a wide range of personal information such as your name and address, business address, phone number, and several other information. The credit report which is registered under your name also has the detailed account details of your loan/credit card information of the loan taken, current balances, and information about whether or not you have paid the bills on time as well as the account in arrears. In a nutshell, a credit report records how well a person has kept up with his/her payment agreements with various current and previous creditors as well as the current balances on the account.

Compared to a report, the credit score just gives a statistical indication of the number. If you have observed that your score has dropped, then the only way to determine the cause is through a credit report. A credit report gives details for things that could have caused the drop, like delinquency on payments or hard inquiries.

Potential employers can look at your credit report with your permission. A credit report reveals a lot about your character. To a hiring manager, you may seem to have a lot more responsibility on the job or less of a risk for corporate crimes. It is estimated that nearly 47% of employers run credit checks to select job candidates. However, contrary to that, employers do not get to see your credit score when they are viewing the report.

People often complain about the errors found in the credit report. A mistake can be something as silly as a typo or an incorrect credit limit. It could be something as serious as someone hacking into your account to rack up the debt in your name. To fix the error, you will have to contact the credit bureau and the company which reported the information.

If you have subscribed to a credit score monitoring service, you will have an idea about the status of your score and that it can fluctuate frequently. It is due to the constant reporting of the creditors to the credit bureaus on a regular basis.

A credit report can be fully accessed by contacting any of the three credit reporting agencies. You can also visit the official website of the respective credit reporting agency and follow the instructions to proceed further. You will be told to file an online request form and send it along with a draft or cheque to cover the fees.

A word of advice you can follow while obtaining your credit report and score at least once a year, especially before applying for a new loan or credit card. Just to avoid making any errors, keep checking your credit reports regularly. Make it a habit to pay on time and limit your credit card usage by up to 30%.

Figure 27.1 FEDERAL AGENCIES THAT ENFORCE THE LAW The law gives you certain rights as a credit consumer. What types of complaints about a creditor might you report to these government agencies?

A pay-for-delete letter is what you use to offer to settle a balance on a negative account in exchange for the debt being deleted from your credit report. The creditor or debt collector is not obligated to agree to your request, but it may be worth sending it. If you're sending the request to a collection agency, you'll need to offer enough for it to be profitable for them to settle. There's no way to know how much that is, though. If you're close to the seven-year mark for the item to fall off your credit report, it may not be worth sending a pay-for-delete letter.

To dispute an item on your credit report, you'll need to contact each credit bureau and file a dispute. You can file your dispute online, which is typically the fastest option. If you have supporting documentation, you can upload that as well. You can also make a dispute by mail; be sure to use certified mail if you do.

Update as of 24 June 2022: This article has been updated to include the latest TDSR, in light of the cooling measures announced on 16 December 2021. \n\n\n\nImplemented back in June 2013 by the Monetary Authority of Singapore (MAS), the Total Debt Servicing Ratio (TDSR) is a framework that safeguards borrowers against over-borrowing for their property purchase(s). \n\n\n\nWhat is Total Debt Servicing Ratio (TDSR)?\n\n\n\nThe TDSR is a cap on the total amount you can borrow, when applying for a home loan.\u00a0In essence, the TDSR limits the amount individuals can spend on monthly mortgage debt repayments, based on a percentage of their gross monthly income. All banks and financial institutions in Singapore must adhere to the TDSR.\n\n\n\nCurrently, the total monthly debt obligations of a given individual or household \u2013depending on whether the property is a single or joint purchase \u2013 is capped at 55% of gross income. \n\n\n\nIf you have variable income (e.g. working on commissions, getting rental income), your income counts as being 30% lower for the purposes of TDSR calculations.\n\n\n\nWhy does the TDSR exist?\n\n\n\nThe TDSR came about for two reasons:\n\n\n\nThe first reason is to prevent Singaporeans from being over-leveraged (i.e. accumulating too much debt for their property asset). This fear is grounded in the 2008\/9 Global Financial Crisis \u2013 the economic crash was precipitated by people taking big home loans, which they couldn\u2019t actually afford.\n\n\n\nThe second reason is to slow the pace of property sales. When there are no loan restrictions, investors tend to purchase more properties, and prices often rise. The TDSR is, indirectly, helping to keep the cost of property manageable.\n\n\n\n\n\n\n\nKey things to note about the TDSR\n\n\n\nDon\u2019t confuse TDSR with true affordabilityNote how variable loans factor into the calculationsIf you\u2019re self-employed, under-declaring your income impacts your TDSRMake sure you gather income documents early for TDSR assessment\n\n\n\n1. Don\u2019t confuse TDSR with true affordability\n\n\n\nEven though the TDSR cap is now 55%, that doesn\u2019t mean it\u2019s financially prudent to reach this amount. As a rule of thumb, your monthly debt repayments should not exceed 30 to 40% of your monthly income \u2013 regardless of what the TDSR allows.\n\n\n\nYou should also factor in your financial situation: if you have just started running your own business, for example, you should aim for a much lower debt limit than the TDSR\u2019s 55%. This will ensure you have enough savings to keep paying the mortgage, in case business goes south.\n\n\n\nIf you find that you\u2019re near the TDSR limit, there\u2019s a good chance your house or loan may be too expensive for you. Find a cheaper alternative.\n\n\n\n2. Note how variable loans factor into the calculations\n\n\n\nSome loans have variable repayment schemes. For example, personal loans and credit card loans often don\u2019t specify a fixed amount you have to repay. For these loans, note that the minimum required payment is used for the TDSR.\n\n\n\nFor example, say you have S$10,000 in credit card debt. For instance, the minimum repayment is 5% (or S$500). In such a case, only S$500 is added toward your TDSR limit.\n\n\n\nIf you have multiple credit lines (e.g. a dozen credit cards and several lines of credit), it\u2019s best to close the ones you don\u2019t use. Otherwise, calculating the minimum repayments for all of them will be a major headache.\n\n\n\n3. If you\u2019re self-employed, under declaring your income can affect your TDSR\n\n\n\nIt may be tempting to under-report your income to avoid taxes. We can\u2019t advice you on the legal issues (we\u2019re not lawyers). But we can tell you that, if you understate your income, it becomes much harder to meet the TDSR requirement.\n\n\n\nIf you\u2019re self-employed,\u00a0check out this post\u00a0for more help on buying a home.\n\n\n\n4. Make sure you gather income documents early for TDSR assessment\n\n\n\nYou will need to offer proof of your income. This can come in the form of tax statements, or simply payslips from clients (if you\u2019re self-employed). If you rely on variable income sources, such as rent or sales commissions, be sure to maintain a record of payments.\n\n\n\nThe tidier your income sources for the accountant, the quicker your TDSR limit is established.\n\n\n\nYou typically have to provide proof of income over the past six months to a year. As such, it\u2019s best to start early. In the 12 months prior to buying, be sure to carefully collect your pay slips, and avoid under-declaring your income.\n\n\n\n\n\n\n\nHow do I calculate my TDSR?\n\n\n\nTo calculate TDSR, take your monthly debt repayments, divide it by your gross monthly income and multiply it by 100%. This figure cannot exceed 55%.\n\n\n\nNeed some help determining your TDSR? Use\u2019s TDSR Calculator to find out your monthly mortgage limit.\n\n\n\nCheck out this TDSR calculation example for a better idea:\n\n\n\n\n\n\n\nWhile this might seem straightforward at first glance, there are quite a few conditions and exceptions that govern the TDSR.\n\n\n\nTo help you budget for your property and make savvy financial decisions, we've simplified what you need to know into seven points.\n\n\n\n1. Outstanding debt obligations reduce the amount you can borrow\n\n\n\nAlthough the maximum TDSR is 55% of an individual's fixed monthly income, any existing debt obligations will count against this and reduce the maximum amount you can borrow. These debt obligations include:\n\n\n\nCredit card balances (including instalment plans for items purchased)Student loansCar loansPersonal loansObligations as a guarantor\n\n\n\nSo, to obtain a higher maximum loan amount up to the full 55% TDSR, pay off as many debts as you can before your next property purchase!\n\n\n\n2. There is a 'haircut' on variable income\n\n\n\nIndividuals will only enjoy the full TDSR if they receive a fixed salary (i.e. fixed income). Individuals with variable income (e.g. freelancers, odd-job workers, self-employed) are deemed \"more risky\" by lenders, hence only 70% of their total assessed income is counted towards the TDSR.\n\n\n\nFor example, if a self-employed professional earns S$60,000 a year, only 70% of the S$60,000 = S$42,000 is counted. His\/her TDSR would then be 55% x S$42,000\/12 months = S$1,925, meaning only S$1,925 a month can go towards debt repayment.\n\n\n\nIf the professional was employed full-time with the same salary, he\/she would've gotten 55% x S$60,000\/12 months = S$2,750, meaning S$2,750 a month can go towards debt repayment.\n\n\n\nSo, generally, a home loan applicant with variable income can only get 70% of the loan amount that an applicant with fixed income can, under the TDSR framework.\n\n\n\n3. There's also a 'haircut' on rental income\n\n\n\nSimilar to variable income, only 70% of rental income is counted!\n\n\n\n4. You can use your investment assets to boost your TDSR\n\n\n\nGood news for diversified investors. According to the MAS, stocks, unit trusts, business trusts, debentures or bonds, gold, foreign currency deposits and structured deposits are liquid assets that can count towards your monthly income. What this means is that you can show proof of such assets to banks, and have them recognised as income to obtain a higher loan amount.\n\n\n\nNote that there is also a haircut of 70% of total assessed income from your assets.\n\n\n\nNo haircut is required if you decide to pledge these assets to the bank or financial institution for a specific time period (e.g. four years) \u2013 a move most property buyers avoid.\n\n\n\n5. Buyer of HDB flats and ECs are subject to an additional criteria\n\n\n\nOn top of the TDSR, buyers of new or resale Housing & Development Board (HDB) flats and Executive Condominiums (ECs) are subject to an additional, more stringent criteria, the Mortgage Servicing Ratio (MSR), on top of the TDSR. The MSR specifies that monthly mortgage repayments for the HDB flat or EC should not exceed 30% of your household income.\n\n\n\nThis means that, although you technically have 55% TDSR in this case, only half of this 55% can be used to pay off your mortgage (e.g. S$2,750 out of a S$10,000 gross fixed monthly income). The remaining can go towards servicing other debts (e.g. car loan), if any.\n\n\n\nUse\u2019s MSR calculator to find out your mortgage limit for an HDB or EC.\n\n\n\n6. Refinancing loans doesn't come under the TDSR framework, unless its an investment housing loan\n\n\n\nAfter the TDSR was implemented in 2013, owner-occupiers who wanted to refinance their home loans at a cheaper interest rate faced roadblocks. In September 2016, the MAS fine-tuned its rules on refinancing, allowing all owner-occupants to be exempted from the TDSR framework when refinancing their owner-occupied housing loans as long as they pass their respective financial institution's credit assessments.\n\n\n\nFor investment housing loans, the TDSR framework still applies when refinancing. However, the owner may refinance his\/her property loan above the 55% TDSR threshold if he\/she meets the following conditions:\n\n\n\n(a) commits to a debt reduction plan with his financial institution to repay at least 3% of the outstanding balance over a period of not more than 3 years; and(b) fulfils his financial institution\u2019s credit assessment.\n\n\n\nAccording to the MAS, this fine-tuning provides some flexibility for borrowers to refinance their investment property loans. At the same time, it encourages borrowers to right size their loans, so that they will be less vulnerable to future interest rate increases or any loss of income.\n\n\n\n7. You can remortgage your paid-up home up to 50% of your property's value, without TDSR limitations\n\n\n\nIn March 2017, the Singapore government announced that the TDSR will not apply to mortgage equity withdrawal loans (MWLs). These are loans whereby property owners borrow cash against the paid-up value of their property. As long as the MWL and any outstanding mortgage amount do not exceed 45% of the property's value (i.e. loan-to-value ratio of 45% or below), the loan is allowed, and the MWL will not be factored into TDSR as an additional debt obligation.\n\n\n\nThis TDSR exemption will mainly benefit retired homeowners looking to monetise their properties.\n\n\n\nWhat happens if you don\u2019t pass the TDSR requirement\n\n\n\nWhat can you do if you can\u2019t meet the loan amount you require because of TSDR limits?You have a number of options: the first, of course, is to buy a cheaper house. The second option is to just make a bigger down payment, or stretch out your loan tenure (both of these will reduce the amount you pay each month).\n\n\n\nThere are ways to raise your TDSR amount, that may not be obvious. Here\u2019s five of them:\n\n\n\nInform the bank of any bonuses or commissions you\u2019ve earnedUse fixed deposits or share portfolios to raise your effective income levelInform the bank of any rental income you earnExclude a co-borrower who holds too much debtReorganize your debt\n\n\n\nThere are plenty of ways to stretch the amount you can borrow for your home loan, if you know how.\n\n\n\n1. Inform the bank of any bonuses or commissions you\u2019ve earned\n\n\n\nMany banks, when assessing your income, default to looking at three months of your payslips. However, this may not accurately reflect your financial situation.\n\n\n\nIf you have earned any bonuses or commissions prior to the three months being assessed, for instance, the bank may be unaware of it.\n\n\n\nYou can highlight this to the bank, and provide the full 12 months of your payslips instead.\n\n\n\n2. Use fixed deposits or share portfolios to raise your effective income level\n\n\n\nIf you have a fixed deposit with the bank, you can highlight this amount to the mortgage banker \u2013 the bank might consider you to effectively have a higher income level, if the deposit is sizeable enough.\n\n\n\nThe same can be done if you have an investment portfolio in your Central Depository (CDP) account. The exact amount of your holdings, in particular the dividend income from your investments, may contribute towards the what the bank considers as your income.\n\n\n\nIt is best to consult a mortgage broker, as they can help with the detailed paperwork to maximise the amount you can loan.\n\n\n\n3. Inform the bank of any rental income you earn\n\n\n\nIf you currently earn rental income on any of your properties, be sure to declare it to the banks. This can add to your income levels, for the purposes of determining your TDSR.\n\n\n\nFor your declared rental income to be valid, you must have an active Tenancy Agreement (TA), with at least six months\u2019 balance tenancy from the date of your loan application. You must also have a valid stamp duty certificate from IRAS.\n\n\n\nDo, however, note that rental income counts as variable income. This means the bank will consider only around 70% of the rental income, when working out your TDSR.\n\n\n\nDeclare your income to the bank!\n\n\n\n4. Exclude a co-borrower who holds too much debt\n\n\n\nIf there is a co-borrower for the property, such as your spouse or a parent, consider who among you has the biggest debt obligations. If most of the debt is on your co-borrowers, it may be better to exclude them and be the sole borrower.\n\n\n\nBesides these methods, it\u2019s important to manage your monthly obligations to improve your TDSR numbers.\n\n\n\nIf you have substantial debts, it\u2019s advisable to start aggressively paying them down in the six to 12 months preceding your home loan application. The less you owe, the less likely you are to breach the TDSR limit.\n\n\n\nWhich leads us to\u2026\n\n\n\n5. Reorganise your debt\n\n\n\nYour outstanding loans probably can do with some spring cleaning. Bear in mind the following to mitigate the impact of debt on your TDSR:\n\n\n\n1) Avoid applying for new credit facilities, such as credit cards or personal loans, in the two months prior to a home loan application.\n\n\n\n2) If you have an outstanding car loan, try to clear it at least one month before making a home loan application.\n\n\n\n3) Refinance any existing home loan to obtain a lower monthly repayment amount and free up your TDSR, if you\u2019re out of a lock-in period.\n\n\n\n4) Your credit report, which is what the banks use to check your debt obligations, is refreshed on a monthly basis. This means you always have at least a one-month head start, to clear any existing debts before your home loan application (you can obtain a copy of your credit report from the Credit Bureau of Singapore (CBS) website, for a fee of S$6.42).\n\n\n\n5) Having never had debt before is not good either, as you\u2019ll lack a credit history that proves to banks you\u2019re a worthy borrower. A lack of c


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