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Best Personal Loan For Bad Credit

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If you are dealing with a difficult situation wherein you are in need of quick cash to tide you up a short period of time, then you may plan to apply for a personal loan. Getting a personal loan is easy, but one thing that could hinder you from getting approved is your credit score and credit history.

Always remember that for banks, government institutions, or legal money lenders to process your application, they constantly rely on your credit report to see and understand the likelihood of how you are going to pay for the borrowed loan amount. Having a good or bad credit score is likely to affect the approval of your applied loan.

What is a Bad Credit Score?

Let start off by explaining what is Credit Score, a credit score can be translated to a report card that shows how well you are doing with your finances. In this report, you can find out how well you are dealing with your credit card bills and other debts (bad debt or good debt including).

A credit score is a four-digit number on your loan records that ranges between 1000 and 2000 depending on your previous payment history. This system is implemented by Credit Bureau of Singapore and DP Credit Bureau, wherein it provides an insight to the  lenders the likelihood of you repaying any loan plan. 

When your credit score is near to 1000, that means you ‘re at a greater chance of defaulting on a loan which is rated HH. If you stand at the highest end of the score range which is 2,000 points, you are perceived to have a good credit standing and you can enjoy the best credit rating of AA. 

If you are interested in knowing your credit score, you can obtain a report via Credit Bureau Singapore (CBS). You can collect from branches of SingPost, Credit Bureau office at Shenton Street, CrimsonLogic Service Bureau or at CASE when it’s available. 

One key thing to remember is the last 12 months of debt repayment records will be tracked and used to measure the ranking (including closed and defaulted accounts), so building a strong credit management routine is key. Although credit remediation is a slow and gradual process with persistence and consistency, the score is likely to change very quickly.

How to Manage a Bad Credit Score Before Applying

Hands open the empty purse after calculating the cost from the credit card

If you are a person with a bad debt history, one thing that you can do is to try to fix your credit rating to a degree where you can apply for loans with better interest rates. What you can do is to always repay loans on time, its a rule of the thumb to not default on your loans. 

Another wise thing to do is to avoid applying for multiple loan enquiries in a short period of time, this will give off a bad impression to the moneylender. Lastly,take and repay a loan to repair damaged credit score, this can help you improve your credit score gradually.

Remember that credit history is one of the determining factors of the bank of your choice when assessing your application so if you don’t need the loan instantly, it’s worth it to wait while paying off personal debts.


Applying Smaller Loan Amount

A bad credit score could stop you from getting a big personal loan from a bank. This is because a poor score or less than a stellar credit history may indicate that you are unable to pay for your loan (personal or another type of loan).

Therefore, another solution is to consider applying for a small personal loan is a form of credit typically ranging from S$100 to S$2000. These personal loans differ from regular personal loans because they usually have loan terms that are shorter and have more flexible criteria for lending. Non-traditional borrowers sell these. It’s important to remember that most banks’ personal loans have a total amount of collateral that’s usually greater than what small personal loan lenders provide.

Why does this help?  If this loan is approved, make sure that no payments are skipped. Place reminders or get a trustworthy friend to remind you of the due dates of this loan. And aim to make a full payment for each.

The goal is to prove you can adhere to a prescribed schedule of repayments. It will demonstrate your willingness to repay the loan, which banks are going to find beneficial.

A key to improving your credit score is to show the willingness towards change, it may be a long process but the long-term goal is to provide yourself an improved credit score report rating.

Paying Off Outstanding Debts

The appearance of outstanding personal debt nearly invariably suggests a poor credit score. One thing you should do to boost your odds of securing a loan is to tackle your current debts.

This method will take months, or even years, so be vigilant and remember you are one step closer to improving your credit score for each repayment you make.

Here are some solutions which could benefit you;

a) Make a list of your outstanding loans

Man holding mobile phone and using calculator

Before you can plan on the best course of action to tackle your debts, you need to know exactly how much you owe each creditor. In order for that to happen, you would need to obtain a copy of your credit report.  This report would help you to the state of your financial health and the amount you owe. 

b) Balance Transfer Outstanding Amount

Many banks offer this function known as a balance transfer. It helps you to combine what you owe from multiple (at high interest) bank firms into one issuer or lender, at reduced or even no interest, while a flat processing charge (around 2 per cent) can be charged.

Besides simplifying your repayments, it also prevents the debt you owe from snowballing on your credit card bills.  Balance transfer repayment has interest-free periods ranging from 3 to 12 months, after which hefty interest will kick in. 

So, if you are confident in your ability to clear the balance transfer amount within the interest-free period, you should only take on a balance transfer.

c) Obtain Credit Counselling

Female psychologist showing clipboard to her patient

When all of the debt reduction strategies listed above does not bear changes, you should contact Credit Counselling Singapore to seek support and guidance to address your debt problems. They will offer guidance, support and connect you to tools that can help you stay debt-free on your journey.

d) Consider The Debt Consolidation Plan

Woman writing debt consolidation plan in paper while using calculator on desk

You can apply for a Debt Consolidation Program (DCP) if you have unsecured debts (credit cards and personal loans) that reach 12 times your monthly income.

This is an initiative by the Association of Banks in Singapore (ABS) that allows you to consolidate at a cheaper interest rate what you owe through different financial institutions into one of the 14 DCP participating banks, with a timeline of fixed monthly repayment rates due before you completely repay all the unpaid balances.

The one thing you have to take note is that all the current unsecured credit facilities will not be available after you apply with DCP, so you will not be allowed to access new credit facilities unless the loans are for educational, medical or commercial purposes.

To control your regular expenditures and cash flow you will be given one credit card with a credit limit of one month’s salary.

 e) Talk to Your Bank

Despite their reputation for being cold, uncareful institutions (especially when you owe them money), banks may offer you alternative options to settle your outstanding credit card bills and unsecured debts through payments.

It is not in the bank’s interest that they earn more money from you theoretically when you have no real ability to repay and are at risk of defaulting.

Therefore, the point of restructuring your debt is so that the money you owe will start paying off. You are restoring your credit rating by making regular payments – in full and on schedule – when making strides on clearing the loans.

Make A List of Providers

By broadening your pool of options you can increase your chances of getting the loan you need. Seek to target non-bank financial institutions, such as Singapore Finance and others, alongside the banks. Such finance companies are accredited with Singapore’s Monetary Authority and have a variety of loans that could suit your needs.

Like the banks, finance companies often focus on your credit rating and history as a borrower to determine your risk. Nevertheless, financial institutions may have different risk appetites or offer a particular package (such as higher interest rates) for which you can apply.

How to Choose The Right Lender of Personal Loans in Singapore

There is no shortage of lenders of personal loans in Singapore. But how do you choose the best one when you get a personal loan? What are the questions that you need to ask before applying for a personal loan in Singapore? How would you pick the right personal loan out of the many options lenders will offer you? How do you weed out the good ones from the bad ones?

Understanding Interest Rates of Personal Loan Singapore Lenders Offer

Singapore personal loan interest rates vary from lender to lender. This makes interest rates vary from lender to lender as well. However, you have to do your research because the interest rates of personal loans Singapore lenders offer may include other fees (e.g. processing fees). This means that a low interest rate is not the best loan if it has other included charges. This also means that a bank with a high interest rate can be a good choice if there are no other charges. So, when computing the interest rate, don’t forget to add in any other charges to see which bank gives you the most savings.


Licensed Moneylenders As an Option

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Finally, when it comes to recommending moneylender as an option, it would typically be something that would not be the first option as we always aim to educate and provide solutions.  But the fact is that applying from a licensed moneylender is a viable option. 

Because licensed money lending is a high-risk, high-reward business, these businesses can only be willing to provide small sums of loans. Lending a small sum makes collecting the principal amount cheaper for them – they will only need to receive a handful of high-interest payments. This reduces their chance of failing.

In the case that you feel the need to turn to a licensed moneylender, make sure that you fully understand the interest plan, the terms and conditions of the loan agreement and give yourself a waiting period to think about it.


Accessing a personal loan with a bad credit score will be challenging for you. You can, however, access one. The key here is to borrow cautiously which can help save you money and help you build your credit score. Having someone who trusts and knows you well enough to get the personal loan on your behalf, you could start.

Education and understanding are important when securing a loan, therefore, it is always good that we equip ourselves with the knowledge and hopefully, these understanding can help through the Loan Advisor website.

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