Some people believe that using cash or other liquid assets to cover their expenses, whether large or small would be very ideal for the financial and economic status of an individual. On the contrary, not incurring any kind of debt can be more detrimental to an individual’s economic situation than anything else.

In some countries like here in Singapore, not having any kind of credit history can be damaging to you and your family’s life. Many countries, including Singapore, nowadays use an individual’s credit history to determine whether they can be a good contributor to the economic development of the country or not. Without a credit history, an individual’s capacity to handle financial obligations can be put into question. This is because there is no way to determine whether he would be a responsible loan player in the event that the time has come for him to apply for car loans or any other particular financial assistance.

More often than not, Individuals here in Singapore apply for loans to either purchase a home or to renovate one. For instance, applying for a mortgage loan for your home is a good way to enhance your credit history and rating with the Singapore Credit Bureau. We all know that buying properties or having them renovated can cost an individual a lot of money and bank loans are the only solutions for this kind of a problem. Borrowing money to invest in homes is a form of investment rather than an expense and if the loan is properly managed and re-paid on time, the borrower’s credit ratings or score will be given a good boost.

Second, People apply for a bank loan if they would want to put up a small business or more importantly create an emergency fund for the individual and his family. For people who are very much conscious of their health, or would just want to be ready to face unexpected expenses, it actually makes sense for that individual applies for a bank loan but not to use it immediately. Remember that it is always a good move to have ready cash available if the same is needed at a moment’s notice.

In Singapore, there is hardly or no person at all that purchases property or any other expensive assets by paying cash for it. Unless you are a Billionaire, it would be impossible for you to buy a property using hard cold cash. Whether you like it or not you will have to apply for a bank loan to finance such large purchases. However, without a credit history to back you up, no lending institution will dare lend you money to finance a particular purchase. This I believe is the why you need to establish a good credit line and history within your community.