How does my credit score affect my home loan application?

Your credit score, as reported by the Credit Bureau Singapore (CBS), is a key factor that banks consider when evaluating your home loan application. It reflects your credit history and behaviour, and can influence both the approval decision and the terms you are offered.

CBS assigns a score ranging from 1,000 to 2,000, with higher scores indicating better creditworthiness. The scores are graded from AA (best) to HH (worst). Borrowers with no credit record are assigned an HX grade, while those with a credit file but insufficient data for scoring may receive a CX grade.

A score in the AA to BB range is considered good and generally results in smooth loan approval at competitive rates. A score in the CC to DD range may still result in approval but potentially with slightly less favourable terms. Scores below DD - EE, FF, GG, HH - indicate significant credit issues and may result in loan rejection or substantially higher rates.

Factors that negatively affect your credit score include late or missed payments on any credit facility, high utilisation of revolving credit such as consistently carrying a large credit card balance, multiple recent credit applications within a short period, defaults or bankruptcies, and legal actions related to debt.

To maintain or improve your credit score, always pay bills on time, keep credit card utilisation below 30% of your limit, avoid opening multiple new credit accounts in the months leading up to your mortgage application, and resolve any outstanding disputes or delinquencies.

If you have no credit history, building one before applying for a mortgage can be beneficial. Using a credit card responsibly for six to twelve months and making full payments on time establishes a positive track record that lenders can assess.

Banks use the CBS score as one of several inputs in their credit decision, alongside income assessment, existing obligations, and internal risk models. Some banks are more lenient than others with borderline scores, which is where comparing across multiple lenders can make a meaningful difference.

Cashew helps borrowers understand their credit position and recommends steps to optimise their score before applying, maximising the chances of approval at the best available terms.