Pay your bills on time

To be safe, always pay your credit cards in full and on time. If you really cannot pay the entire balance each month, at least pay the minimum amount promptly. And if you have problems doing even that, inform your bank early so that a management payment scheme can be worked out. Doing so will also signal your commitment to pay up, said Mr Joseph Wong, OCBC Bank's group chief credit officer (consumer credit risk management).

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Mr Rahul Gupta, chief executive of GE Money Singapore, pointed out that if you continually make only minimum repayments, especially on several accounts, lenders will still question your ability to pay.

Avoid multiple sources of credit

Mr Wong advised consumers to avoid applying for more credit lines or credit cards than they need. This is because it will raise questions on their ability to manage and service the various credit card bills. Besides, it is easier to keep track of two credit cards or loans than say, six, added Mr Gupta.

Don't exceed your credit limit

If you spend beyond your credit limit, it may reflect your inability to handle your finances properly, especially if all your credit lines are fully used up.

Opt for Giro arrangements

Sometimes, defaults on repayments are simply due to an oversight by the borrower. To overcome this, Giro arrangements as well as other standing instructions for recurring payments ensure prompt repayment, a spokesman for United Overseas Bank suggested.

Keep track of your debt servicing ratio

To approve loans, banks typically use the debt servicing ratio, which is the percentage of one's monthly income used to service long-term liabilities. The recommended healthy debt servicing ratio is 35 per cent or less, although every bank has different acceptable levels of debt servicing ratio.

Initiatives to encourage responsible borrowing

Some financial firms have schemes to promote prudent borrowing. For example, GE Money waives the last month's instalment for consumers who meet their payments over the loan's term. Its other 'interest waiver' feature rewards customers with 50 per cent off three months' interest, for paying promptly in the first year of their loan.

Do not be afraid of credit counselling

If you are overloaded with high-interest debt and are in danger of falling behind on your payments, or you already have, consider working with a non-profit agency such as Credit Counselling Singapore to set up a debt repayment plan, said Mr William Lim, executive director of Credit Bureau (Singapore). These services can negotiate lower interest rates and help you pay off your bills within a few years.

Avoid bankruptcy if you can

Bankruptcy is a disastrous impediment to one's good credit reputation, far worse than delinquencies and missed repayments on loans. Its impact, however, depends on how many defaults you made on your credit before you filed, said Mr Lim.

This article was first published in The Straits Times.