The Lion City is the financial hub of Southeast Asia, and yet many Singaporeans are not exactly good at managing their finances. This notion is particularly true when it comes to millennials.
Many young adults in the country do not have good credit because they do not know what it takes to increase their credit score. If you do not have a high credit grade, your chances of qualifying for a personal loan in Singapore are slim. If you can borrow money, though, your prospective lender might not agree to loan you a lot of cash because of your being a risky customer.
To build your credit successfully in a country with a high cost of living, avoid the following bad habits:
Despite government efforts to curb excessive unsecured lending over the years, the total credit card debt in Singapore remains high. There are many reasons for this phenomenon, but unwise spending is perhaps the biggest culprit.
Many Singaporean millennials are addicted to branded items, which becomes a concern when a person’s income is not enough to purchase luxury goods. It is also not uncommon for young adults in the country to fund yearly holidays even if their salaries can’t justify the annual expense.
The young adults who dream of a prosperous life often think the credit cards provide “free money.” As a result, they tend to spend beyond their means.
This unhealthy use of plastic creates a vicious cycle. Maxing out credit card limits does not impress creditors. This habit can pull down credit scores, especially when practiced for a long time.
Swiping plastic in almost every occasion is bad, but not paying the bills on time and in full is even worse. Credit bureaus pay close attention to the payment history of consumers when calculating credit scores. These organizations hate to see people who overuse different types of credit, but they are less forgiving to consumers who do not pay wholly and punctually.
As a responsible credit card user, avoid paying with plastic if you can’t zero out the balance on or before the due date. Otherwise, the unpaid portion of the bill will incur interest, making the debt even harder to repay.
Having Too Many Credit Cards
If you are struggling to handle your finances, it is not wise to cut all of your credit cards in half. After all, you need them to build your credit over time.
However, you should keep their number to a minimum. Having one too many can strengthen the urge to spend the money you have not earned yet.
Fewer credit cards are also more manageable. Dealing with two (instead of three) credit card bills with high balances is less stressful to pay down, especially if you have limited income.
In the end, financial irresponsibility might be a common trait of young consumers, but it should go away as Singaporean millennials get older. It can be hard to develop good spending habits, but it is never too late.