Recently, one of my friends was viewing his credit report and to his astonishment, he received a FF rating even though he has always paid his bills on time.
We spent some time analysing the reasons and I thought it would be useful to share.
1. Credit exposure
The most common cause of this is borrowing or spending too much on your credit cards. This could be actual spending or “fake” spending such as via the credit card to Amaze to GrabPay to bank loophole where you can earn points and get cash upfront just from transferring money around.
2. Too many enquiries
This could happen if you are always applying for new credit cards in order to earn the new to bank benefits such as bonus miles or free gifts like cash, Dyson vacuum or Airpods. Frequent enquiries could be a sign that you are always looking for credit and may impact your credit rating.
3. Immature credit history
I was not able to confirm the actual reason for this but I assume it was the cancellation of credit cards after a short period of time. This goes back to point 2 where a new credit card is signed to reap the sign up bonus and then cancelled shortly to restart the new to bank timer (usually after 1 year).
🤔 So what is the impact of a FF credit score? Your loan amount is likely to be lower and/or you might be offered a lower tenure.
So there you have it! The conclusion is that there is always a trade off when you try to “game” the system and sometimes we may not know the repercussions until we decide to take a loan.
