When navigating the realm of borrowing, especially from licensed moneylenders, you might have encountered the concept of a borrowing limit. This limit encompasses the total amount you owe from various moneylenders. But have you ever wondered how these lenders are privy to this information? The answer lies in the Moneylenders Credit Bureau (MLCB) report.
While licensed moneylenders may not consider traditional credit scores, they delve into other factors before approving a loan. One crucial tool in this assessment is the MLCB loan information report, which aids in evaluating creditworthiness and determining the remaining borrowing capacity for a borrower.
From comprehending the MLCB report to understanding its role, procedures, and benefits for borrowers in Singapore – this article provides you with essential insights.
Unveiling the Moneylenders Credit Bureau (MLCB):
Established by the Ministry of Law (MinLaw) in March 2016, the Moneylenders Credit Bureau (MLCB) serves as a central repository for loan information from licensed moneylenders in Singapore.
In early 2021, MinLaw authorized licensed moneylenders to access loan information through MLCB’s loan information report, which continues to be operated by Credit Bureau Singapore (CBS) as mandated by MinLaw.
MLCB plays a pivotal role in preventing borrowers from overborrowing and falling into deep debt. However, it does not collect data from banks and other financial institutions, nor does it make lending decisions on behalf of moneylenders, as stipulated by the Moneylender’s Act.
Functioning of MLCB:
MLCB operates a loan management system for both moneylenders and borrowers. It starts with collecting loan and repayment data from borrowers and extends to making this information available to licensed moneylenders through credit reports.
Licensed moneylenders are mandated to submit data on borrowers’ loans and repayments to ensure up-to-date records. This data is used to evaluate loan applications, with moneylenders using the report to assess a borrower’s creditworthiness.
The MLCB Loan Information Report:
Comparable to a credit report, the MLCB loan information report provides an individual’s loan history with various moneylenders. It encompasses several key details:
Personal Information:
This section includes the borrower’s personal details such as name, address, birthdate, NRIC number, or Unique Entity Number for companies.
Employment Details:
The report contains employment data, including the employer’s name, address, monthly income, and CPF contributions.
Loan Records:
Active loans, outstanding balances, repayment history, and defaults are detailed under the loan section. It also offers a comprehensive summary of loan particulars like type, tenure, interest rate, and late fees.
Payment Status:
Reflecting a 12-month repayment history, this section is updated in real time, often by the next business day. Consistent on-time payments enhance your position as a borrower.
Civil Judgments:
Final court decisions for overdue loans, known as civil judgments, can impact a moneylender’s decision on your loan application.
Exclusion Records:
Borrowers can register on the self-exclusion list (excluding debt consolidation loans), which is also indicated in the report.
Bankruptcy History:
Bankruptcy records, lasting up to 10 years, significantly affect credit scores.
Access to MLCB’s Loan Information Report:
Only four parties can access this report:
- Borrowers
- Licensed moneylenders
- Ministry of Law
- Registry of Licensed Moneylenders
Moneylenders are required to request a copy of this report when borrowers apply for loans. Conversely, borrowers can request the report for financial management, credit score improvement, and discrepancy checks.
Impact on Borrowers:
The MLCB report significantly influences loan applications. Licensed moneylenders determine approval and borrowing amount based on this report, which displays your total existing loan balances from different moneylenders.
High-risk borrowers can be identified, helping curb excessive borrowing. Delinquent borrowers receive lower credit ratings, while those with good behavior enjoy better credit scores.
Improving Credit Ratings:
Improving your credit score takes time but is achievable in about a year. The report reflects a 12-month history, meaning responsible behavior during this period can enhance your credit score.
Key Steps to Improve Your Credit Rating:
Timely Repayments:
On-time repayments are crucial; inform your lender if you anticipate delays.
Controlled Loan Applications:
Avoid multiple inquiries in a short time, indicating financial difficulties.
Avoid Defaults:
Defaulting on loans has a lasting negative impact.
In Singapore, borrowers can access loans up to six times their monthly income, contingent on limits. Moneylenders refer to MLCB’s loan information report for loan approvals and limits. Existing loans’ diligent repayment increases chances of a higher loan amount. MLCB’s comprehensive report ensures responsible borrowing and empowers borrowers to manage their finances wisely.
Key Takeaways:
- MLCB’s loan information report guides licensed moneylenders in loan approval.
- The report serves both lenders and borrowers’ interests.
- Only authorized parties can access the report, guaranteeing data safety.
- Responsible borrowing enhances credit scores and loan opportunities.
Are you preparing for a personal loan application?
If you’re navigating the complex world of loans, whether it’s understanding credit reports, loan approval criteria, or finding the best options tailored to your financial situation, consider reaching out to OT Credit. Our team of experts is dedicated to demystifying the borrowing process and guiding you through every step. Feel free to contact us for personalized assistance that will help you make informed decisions and secure the financial support you need. Your financial well-being matters to us, and we’re here to support you on your journey towards a brighter financial future.
