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How to Check and Maintain a Good Credit Score in the Philippines
December 27, 2022 by Jazzen Del Mundo
People can find invitations to open new credit accounts in the mail, on television, in stores, and online. Even though they could be alluring, it's crucial to carefully assess the current financial status to decide whether taking on extra debt is a sensible move.
A loan is a quantity of money that one or more people or businesses obtain from banks or other financial organizations in order to handle their finances in connection with anticipated or unforeseen circumstances. By doing this, the borrower creates a debt that must be repaid with interest inside a predetermined time frame. People acquire loans to be able to purchase properties with a large value, such as a condo for sale, a house and lot, a car, or even for starting a business.
Is having a loan worth it?
Prior to any money being transferred, the lender and borrower must agree on the terms of the loan. The loan document will specify any instances where the lender may ask the borrower to pledge an asset as security. A typical loan is a mortgage, which is obtained to buy real estate.
Lenders have different requirements for personal loans, but there are several factors that financial institutions consistently take into account when considering applications, like credit score and income. Learn about the typical requirements you'll need to fulfill and the supporting papers you'll need to present before you start looking for a loan. This information may increase your chances of being accepted and make the application process run more smoothly.
What is a credit score?
Numerous parts of people's lives are impacted by their credit score, including whether they qualify for a loan or credit card, the interest rate they pay, and whether they can rent the apartment they desire. You may be able to obtain more credit products with cheaper interest rates if you have a higher credit score. Borrowers with scores above 750 or so typically have a wide range of options available to them, including the possibility to get approved for 0% auto loans and 0% introductory APR credit card offers.
Why do you need a good credit score?
Banks and lenders are more inclined to grant your credit applications if you have good credit. This implies that you will have a higher chance of approval when applying for credit cards, loans, or mortgages and may have to wait a shorter time for the outcome of your request.
People can get the best APRs from lenders and a better chance of getting approved for credit cards and loans by having a good credit score.
The finest credit cards frequently demand good or excellent credit. A person will need at least a decent credit score to take advantage of things like competitive rewards, annual statement credits, lux travel privileges, 0% APR periods, and more. Additionally, your chances of being approved are increased if you have a high credit score.
Checking and Maintaining a Good Credit Score
The CIC credit report or one of its accredited credit bureaus can provide Filipinos with their credit report for a little cost. You can obtain a credit report from CIBI Information Inc., the sole provider of consumer credit reports that currently include credit score information, to verify your credit score.
Steps in Checking your Credit Score in the Philippines
In checking the credit score, login to the web app version of Credit Information Bureau, Inc (CIBI), a credit information corporation. It was created to engage in collating, developing, and analyzing credit information on individuals, institutions, business entities, and other business concerns and is also responsible for giving people their credit reports and credit scores.
Verify your account to schedule an appointment. To verify the account, use one primary and one secondary ID, then schedule for character verification through a video call on Mondays to Fridays, from 8:30 AM to 5:30 PM.
Your identity will be validated through the Know Your Client (KYC) process which is done to verify that you really are the person requesting the credit report.
After paying the CIBI through any of their payment channels, they will email you your credit report that includes your credit score.
Maintaining Good Credit Scores in the Philippines
Pay bills on time
All these installment debts, such as a mortgage, and revolving debt, such as credit cards, are considered when calculating your credit score. Even if your line of credit, for example, has a low-interest rate, you should not give other loans priority if doing so would require skipping that payment. Continually carrying a load on your credit cards or exceed credit limit might reduce your score and make it more difficult for you to get approved for loans and additional credit card accounts.
More than credit cards and loans, all of your bills, depend on timely payments. Though you do not utilize one of the third-party businesses that can record your on-time current utility and rent payments to the credit agencies, if you do not pay on time, payment history on those accounts may still appear on your credit report.
Keep an eye on your credit report
By regularly reviewing your credit utilization ratio, you can find these errors earlier, fix them, and keep up a decent credit score. Even though you manage your credit properly. it does not guarantee that others will. Your credit score could be negatively impacted by errors that appear on your credit report. Incorrect data on your credit report might also result from identity theft and credit card fraud.
Utilize old credit cards
The three major credit bureaus—Experian, Equifax, and TransUnion—no longer receive updates whenever a credit card is closed, which lowers your credit score since inactive accounts are given less value in the credit scoring methodology.
After a decade, the credit agency will completely delete the data of that closed account from your credit report; missing this credit history will reduce your average credit age and lower your credit score.
Try to make full payments
Sometimes tiny debts might be stretched out over years if only the bare minimum is paid, which would result in astronomical interest charges. If the bare minimum is all you can afford, be sure you pay at least that amount each month, or your credit report will include missed or late payments for years.
Even small debts can often be extended across years if only the minimum level is paid, which would incur excessive interest costs. If paying the absolute minimum is all you can manage, be sure you do so every month; otherwise, years' worth of missed or late payments will appear on your credit record. Having good credit can indicate that your financial condition and overall quality of life are on the correct track. Remember that your credit score can influence your insurance premiums, even the type of apartment you can rent or if you plan to purchase a condo for sale.
Related Blog: Starting Early: Getting Your Kid a Good Credit Score