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Are You Confused By Debt Consolidation?

Many Singaporeans want to make their financial situation better. If you are in a similar situation, you would like that too. It is for this reason that you consider using consolidating your debt. Debt consolidation could be the ideal way to help you. It will offer you the chance to handle your bills in one fell swoop.

Below are several tips on debt consolidation that can act a guide.

Why Debt Consolidation?

Make sure that you are clear as to why you would like to consolidate your debts. Debt consolidation can be a good choice. Especially for someone who wants to contribute smaller monthly remittances. It is also useful for individuals who want to save on interests. Eventually, this will help you get rid of your debt.

For those who can easily make large payments every month. Thus cover their interests and fees being applied by creditors. Then, debt consolidation may not be the best good option.

What To Consider?

Carefully consider the collateral terms for any consolidation loan you request. Often these loan types include a clause regarding your home. That is if you default. Certainly, this might get you at serious risk. When the condition makes your loan repayment difficult. Always keep your home from any loan contracts. Additionally, make sure you read the fine print.

Keep the long-term future of your finances in mind. Short-term options come easily like debt consolidation. This helps you immediately reduce your bills that need to pay each month. However, think of more than this. Look at what you have to do to make the long-term financial situation looks good.

Ensure that you are clear on the difference between home equity loan and debt consolidation. Some companies guise a home equity loan as debt consolidation. Home equity is where your home is put on the line to acquire a loan. This is not always the best move. Especially when your family is involved. Understand the differences and risks involved before deciding on this loan.

What To Look Out For

When your moneylenders are applying high interests to your accounts. Using a personal loan might the right option. Look for a personal loan that has good interests. A debt consolidation plan is good provided the interests offered are lower. That is when you compare what moneylenders are charging you.

Many consolidation specialists provide home equity loans. However, they do not offer these products. When you use your house as a security for a loan. Then you are getting a home equity loan. Such an option is not good. Unless you are certain of repaying the loan on time.

Credit line or home equity loans are a good option. More so when your home is fully paid for. You could actually borrow money then use your house as a security. Get enough loan money to repay your debt. Ensure that you repay on time. The interests charged on your loan can be deducted from your taxes.

Always ensure that money you pay to your creditors through the company actually gets to them. In some cases, some agencies may fail to deliver the money. At times some of this money goes towards random “fees” rather than to your creditors. Obviously, this is a situation you would want to avoid.

Repaying Your Debts

As you make the efforts to repay debt, there are two options available. The first option is to repay all the smallest debts to start with. The second option, you tackle debts with the highest interests first. Each of the two options has a set of pros. Therefore, choose the alternative that will work for you. This will start you off on a journey to get out of debt.

Before you enter into the program. Ensure that you discuss the plans for consolidating your debt with your spouse. It is advisable that you both work together on the financial situation. This will help you to actually reduce the debt. This will also help you make your finances better. When you do not discuss things, your partner might continue to grow the debt. Thus eventually hurting both your financial situation.

Money problems will not disappear since you have taken a debt consolidation loan. This is if you do not improve your spending habits. Then you will continue getting into debt. Once you have received the debt consolidation loan. Ensure that you carefully look at your spending habits. Then make the needed adjustments to help you for later.

It is recommended that you come up with a working debt management strategy. This will be helpful when you are getting a consolidation loan. This will include getting advice from a debt counsellor. You can access a counsellor from credit counselling organizations in Singapore. Your counsellor will work with you to come up with a budget. The budget will ensure that you can afford to pay all your bills.

Do Not Fall Back Into Debts

Come up with a working budget. Do not wait for a consolidation company to assist you to make a budget. When you have control over your finances. You are on your way to better financial well being.

Be prepared to make changes to your spending habits. This is immediately after you have decided to take on a debt consolidation strategy. You need come up with better spending habits. This should also work hand in hand with your consolidation. This will help you have lasting. Otherwise, you will end up having more debt. This is even more than the debt you had earlier.

Nearly all debt consolidation loan is non-profit. People get tax breaks for firms that provide services to borrowers. This does not mean the consolidation is free. The companies offering this service will charge fees. They do need to file paperwork and pay their employees. They also have additional costs related to operating their business.

As earlier mentioned, most Singaporeans want to change their financial situation. When you seriously want to remedy your financial issues. You could start by thinking of consolidating your debt. With the above information, it will get you started off today. By using debt consolidation plan you will have peace of mind. At the same time, you will turn your finances around.

 

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How Will Your Credit Report Impact Your Unsecured Loan Application?

A credit report is generated by the Singaporean Credit Bureau. This report gives a summary of credit acquisition. As well as usage and repayment record. It is issued to the Bureau members. These members ask about credit status of a borrower. You can also get your credit report by approaching the bureau.

The credit report contains specific details regarding a borrower. This includes details such as a borrower’s name. As well as their profile. This is excluding their phone number and physical addresses. Data about past credit assessment is used. Also, the manner of repayment for a year is indicated too.

Any default records including the dates are in the report. Bankruptcy records for a period of 5 years after discharge are in it. All terminated and closed account records going 3 years after closure. Lastly, aggregates of credit limit allowed and outstanding balances are included.

Role of Credit Bureaus

Bureaus are credit records repositories. They provide information which enables members to assess a borrower. That the risk involved in lending to a borrower who applies for loans.

Informed loaning decisions help moneylenders protect the profit margins. Even so, the bureau does not provide credit facilities. Banks, however, use this information regarding a borrower. By applying their own policies. They can choose to reject or accept credit.

Your credit report is accessible to bureau members and to you alone. The bureau members are only allowed to use it to assess credit. A written Code of Conduct regulates the access means. This has strict privacy regulations. These rules should be followed by its members.

Credit Report Data Providers

Just two bureaus have authority to offer credit reporting services. They also are permitted to run credit checks for their members. As gazetted by the Singaporean Money Authority (MAS). These are the Credit Bureau (Singapore) and DP Credit Bureau Ltd.

Associates of either of these credit bureaus can deliver a credit report. These include banks, moneylenders, and other financial institutions. Other are utility and credit card companies. The associates may also access data such as bankruptcy proceedings. They get from the public domain records.

Factors That Affect Your Credit Score

You score is computed following based on several factors. These include:

Recent applicationsMoneylenders that see several recent personal loan requests on your record. They may consider you a bigger risk. This is since you seem financially desperate. That is why you should limit the new credit you request submit.

Default – Overdue payments and late payments on your personal loans are noted here. These together with utility bills lower your score.

Usage – This refers to the amount of credit that a borrower has used. It can also be what they owe on their credit account.

Inquiries – All the new loan applications you make translate to a credit inquiry. These are then posted on your credit report. Having too many credit inquiries within a short time does affect your score.

Credit available – They get the difference between total credit limit and credit used. This will give the available credit. Having a higher availability can be good for your score.

Credit history – By having a longer credit history, shows you are more stable. This means as a borrower you are considered less risky. When your history is short, not enough information is provided. This makes it hard for lenders to assess your credit-worthiness. It is for this reason you should start building your credit early. When possible you could start after you have reached the age of 18. The report also shows the repayment conduct for a period of 12 months.

Importance Of Credit Reports

Your credit report gives a breakdown of your repayment ability. This is based on the historical data on your report. This enables moneylenders and banks evaluate your ability to repay your loan. This is should they decide to grant you credit.

Realize that it is for your own benefit. More so when you maintain a good repayment record. Overdue/non-payments and other credit defaulting are on record. This can stay on your report for many years after. This will lower your score. They might also make you not access borrowing chanced in future.

When you monitor your report, you can prevent fraudulent acts against you. This is where an individual uses your private details and rating to get credit. Although other aspects play into the getting of credit from a lender. You may greatly improve chances of getting credit. This you can do by having maintained a great repayment record. This will translate to a high credit score.

A credit score is often posted at the end of your report. This is usually indicated using a four-digit number. This is issued based on the information included in your credit report. This number can range from 1000 to 2000. Where 2000 shows the least tendency to default. The ranges in between are then set from AA to HH. Here AA shows a borrower is the least risk to lend to.

It is advisable that you examine your report at the least monthly. This way you will know the status of your credit. You can obtain this information from both bureaus. Ensure you compare the records to make sure they are correct. Your record should show the actual state of the credit history. It can sometimes happen that erroneous entries are posted. This is not uncommon for these reports. This is why you need to ensure to keep track of your report. This will ensure the accuracy of your records and rating.

How To Get Your Credit Report

You could get your credit report from the Singaporean credit bureau. Other sources are CASE offices, CrimsonLogic Services and any Sing Post branch. You will need to pay a transaction fee for the service. You can subscribe to the premium service known as “My Credit Monitor”.

This service evaluates your record on every day. It will also send you an email when there are changes to the data. By using this service, it is easy to detect changes. It will alert you to possible identity theft. Thus you can take action to prevent any major damage.

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The Myth Of Licensed Money Lenders In Singapore

Different from the popular belief that makes some Singaporeans avoid one. Legal moneylenders are out to help you through a financial crisis. Accredited moneylenders are like any other business owner.

Although its true that they want to make money through this business. They definitely do not want to do so at the expense of borrowers. To provide you more confidence in knowing loans.

Below are some moneylender myths. These might be stopping you from getting a personal loan when you really need one.

How To Tell apart a Legal Moneylender From An Illegal One

An authorized moneylender will ask to see an NRIC card. They might also request for other personal identity paperwork. This will be used to help them verify your identity. Even so, they should not want to retain the documents. Some of these documents are passports, driving licenses, ATM cards, work permits, or employment passes.

When the lender needs them, they can use a copy of the ID card for their file. however, they should return to you the original after checks. A few unlicensed moneylenders will slyly ask that you provide them with the SingPass password and Username.

You are not obligated to offer such details to any lender. Even then, this request is highly unusual even as a requirement.

What Makes a Dependable Moneylender

Only seek to deal with a legal moneylender. This is because these lenders have fulfilled all requirements set by law. These regulations are aimed at protecting your interests. These moneylenders will possess all the licenses and permits that prove their compliance.

To ensure that your moneylender of choice is duly registered. Always demand that they show you their registration papers. Importantly check their license number against the one shown at the Moneylenders Registry website. Do not accept only a verbal confirmation.

What Are The Different Types Of Loans?

Do realize that in Singapore there are two kinds of loans. These are unsecured and secure loans. This means that when you are considering to take out a personal loan. The one aspect you will have to think about early in the borrowing cycle. As to whether you want to pledge security for the loan.Or you do not. Collateral or security is a valuable asset. This asset rights will be signed over to the lender in place of a loan.

In simple terms, it means that in case you are not able to repay your personal loan. The moneylender can assume ownership of the asset provided as security. They can choose to sell it and recover their outstanding amount.

When there is no security needed. The loan provided to borrowers will not have security by using an asset. This is what is known as an unsecured loan. When the borrower is unable to repay it, the lender does not have the right to assume their property. However, only when a court order and direction from a judge can the do so.

What Secured Loans Are

Not all assets that an individual owns can be used as collateral for loans. The value of the asset value should be worth a lot more than borrowed amount. Additionally, it should also cover the entire interest attracted on the loan. For example, you could use your house or car. Also, other realty possession is acceptable. Once you have signed over the rights of an asset. Your lender will place the lien on that asset.

Your lender will then hold on to all the documents of the property. This also includes duly signed forms of transfer. The form will be waiting to take effect should you default your repayments.

Nearly all mainstream lending organizations like banks provide loans that are secured. This is because this decreases the lending risk of their establishment.

What An Unsecured Loan Is

Unsecured loans are loan amounts borrowed without using any assets. This asset is what a borrower pledges to help protect a lender’s investment. This is only in case they default on their payment. In such a situation, the lender’s only help is to begin legal action. This will be done against a defaulter.

In this case, the court can order a defaulter to repay the outstanding loan amount. When the borrower is declared bankrupt, the law court can order their property be sold. The proceeds can be used to settle their debts.

As such a lender still this does not give assurance. Thus they are certain the will regain their investment. This is because the borrower might have other creditors. Yet the creditors have to be repaid first.

What Are The Disadvantages And Advantages Of Unsecured Loans

Advantages of unsecured loans

  • These do not put a risk on your assets.
  • They are a quick financial solution for individuals with a lower credit score
  • They are fast to process. This is because the asset valuation checks are not as strict.

Disadvantages

  • They attract higher interests compared to corresponding amounts that are secured. This is because they should not take your assets under unforeseen circumstances.
  • These are limited depending on the amounts you can borrow. This is normally an upper limit of four times your monthly income.
  • They come with stricter repayment plans. The instalments are higher to limit the risk to legal moneylenders

What Types Of Moneylenders Are In Singapore? Are The Lenders All “Ah Longs”?

In reality, they are no many differences between licensed and unlicensed lenders. This you cannot tell instantly. However, here are a few things you could do for background checks. This is before you “sign the papers”

Prior to accepting personal loans from any moneylender. you should ensure that they have a valid license number. Confirm that their certification is legitimate. The Moneylenders’ Registry has the complete list of licensed lenders. This they do on their official website. The registry ensures it is updated each month. They place this list is there to assist customers. Borrowers use this to confirm details provided by prospective moneylenders. Therefore, remember to double check the provided list before you borrow.