Credit scores may just be one of the most important pieces of information about you. When you apply for a new line of credit, formal credit companies in the Philippines and abroad use credit scores to gauge your reliability and trustworthiness. It paints a picture of your financial standing, credit spending, and payment history. Thanks to the comprehensive history that credit scores amount to, it may also figure into your employment prospects and insurance rates. Learn what credit scores are, what they contain, and how to check your own credit score in the Philippines today.
What is a credit score?
Usually, your credit score is a three-digit number that evaluates how likely you are to pay off a loan. It incorporates all kinds of financial information about you, from the time you first opened a bank account, applied for a credit card, and started asking for loans. It also includes all credit accounts you’ve owned – both inactive and active credit lines.
But why is a good credit score important? Mainly because credit scores act as your financial scorecard that measures your identity in many major financial situations. Banks, credit card companies, and other lending institutions use it as a basis for the approval of any loan or credit card application. It is also based on other factors, such as how many accounts you have in good standing and your ability to make payments on time.
However, because there are numerous ways that formal financial institutions in the Philippines calculate credit scores, this wouldn’t be consistent for all lenders, banks, and credit companies.
How to check your credit score in the Philippines: The Traditional Way
You might be asking yourself now, “How do I check my credit score in the Philippines?”
Two ways you can get your credit score in the Philippines is by requesting a CIC credit report in person or by applying for your credit score through the CIBIApp web application.
How to get your CIC credit report in the Philippines
To get a copy of your CIC credit report, here are the steps that you need to do to put in a credit report request on the CIC website:
- Click on “Services.”
- Select the option “Get a CIC Credit Report.”
- Read the Terms and Conditions carefully before clicking on the “I agree” button.
- Select your preferred Date of Appointment.
- Provide the needed personal information.
- Download and print your Application Form.
You need to personally visit the CIC office located in Legaspi Village, Makati City, Philippines to check your credit score through the credit report. To ensure the safety of your credit data, the CIC conducts a Know Your Customer (KYC) process.
You may also request your credit report online through the CIBIApp, but you will also need to undergo an online character verification step wherein an in-house verifier will conduct an online call with you.
What do traditional credit reports contain?
On a basic level, your credit report contains all basic identification information, including your full name, Social Security System (SSS)/Government Service Insurance System (GSIS) number, TIN, present employer information, current and permanent address, and any commercial business you may own. It will also contain your present utility subscriptions, past and present loan contracts with formal lending institutions, and installment and non-installment contracts. Credit reports disclose both positive and negative financial history. All these pieces of information will be used by financial institutions to process any credit application in your name.
These pieces of information allow lenders and service providers to assess loan applications fairly and objectively. People with good payment track records will receive more services and lower interest rates.
What are the key factors that traditional credit scores consider in the Philippines?
Credit scores are dynamic figures that continually change as more financial information is added to a person’s credit report. Your credit score may also vary depending on the type of loan application and financial institution you’re applying to. For instance, a mortgage lender might use one scoring model, while an auto lender uses another.
However, while your credit score may not be uniform across the board, there are specific factors that affect how your credit score is calculated, regardless of which institution will be evaluating it. These include your general payment history, consisting of accounts paid, delinquent accounts, and negative public records; credit types that you have in your name, including mortgages, installments, and revolving credit lines; and used and available credit.
Lenders and loan companies typically need to know how much your available credit is and what your paying behavior looks like. For example, you may see a negative credit score if you’ve opened new lines of credit within the same year or if you’ve maxed out your credit limit for multiple accounts.
How to check alternative credit scores in the Philippines for a broader financial perspective
While banks and other financial institutions generally depend on the traditional credit scoring system, it has become apparent that the traditional scoring limits the coverage to only a specific subpopulation: the banked and financially literate. This is why we are seeing a shift to alternative credit scoring in conjunction with the traditional – to not only make credit scores more inclusive but to also expand the screening capabilities of financial companies. However, the next question is, “How do you check your alternative credit score?”
Fortunately, there are now alternative credit scoring companies that specialize in furnishing alternative credit reports and scores to credit companies and individuals in need of financial documentation outside their credit and payment history. One of which is FinScore, a pioneer in financial technology in the Philippines that use accessible alternative credit data to measure a person’s creditworthiness, even for individuals without a current credit background and history.
Why are credit scoring alternatives needed in financial services?
Despite the technological advancements and improved accessibility to financial opportunities in recent years, credit approvals are still relatively elusive for the underbanked and unbanked. This not only increases rates of credit application failures, but it also makes way for higher interests and uncompetitive credit benefits. This is clearly reflected in the Bangko Sentral ng Pilipinas’ Financial Inclusion Report for 2021, where it was reported that 54% of adults – especially those who belong to low-income households – opted for informal loans from friends, family, and informal lenders instead of applying at formal financial institutions.
Multiple studies have delved into the reason why low-income households opt for informal loans, with the findings stating that most banks and formal lenders do not view the urban poor as bankable individuals. On top of that, most cannot be assessed by their credit scores because of their lack of formal payment histories and credit mix. To address this, financial institutions are now looking into supplementing traditional financial data with alternative local data providers to better service that portion of the population.
Alternative credit scoring can work as a partner to traditional credit scoring in the Philippines, providing data to financial institutions that are not usually included in credit reports. Banks and lending companies would be furnished with more comprehensive reports that will clearly reflect the financial capabilities of an individual, whether they have an existing credit history or not. What’s not included in traditional credit scores in the Philippines will be covered by the alternative scoring system.
In a way, alternative credit scoring helps financial institutions widen their service offering to a broader population – especially since most of the Filipino population today have access to some of the data sources of alternative financial tech companies. In conjunction with the traditional way of credit calculations, alternative credit scoring can open a world of opportunities in the financial world both for credit applicants and financial companies.
What steps are financial institutions taking to broaden the credit scoring landscape?
Today, fintech companies in the country, such as FinScore, are raising the bar to improve transparency in the financial industry. In the past, if you didn’t have the chance to build up a credit history, it was hard to get access to any kind of loan. This forced consumers to borrow funds at unfavorable, even greedy, interest rates.
As a leading innovator in the financial industry, FinScore is shaping the landscape of banking and loan screening in the Philippines by introducing alternative credit scoring in the market. Their growing partnerships with financial institutions can pave the way for the unbanked to have improved access to loans and other financial services – privileges that were once inaccessible to them.
The expanded service coverage of financial institutions will bode well for individuals who seek financial independence and for those who are looking to bounce back from financial turmoil, especially from the negative effects of recent global events such as the global pandemic and economic crises in the Philippines.
How do fintech companies like FinScore check credit scores through telco data?
At FinScore, we measure consumers’ reliability by aggregating telco data such as text usage, call usage, data usage, top up, geo-location, time since activation, sharing of top-up credit (Pasaload) into scorecards. This allows us to provide credit scores for all types of applicants – even those without reports from credit bureaus.
FinScore can provide credit scores for every Filipino due to its 100% telco data coverage in the Philippines. The credit scores are also processed in less than a second, providing real-time data with no action required from the applicants.
We provide companies with valuable, predictive information on the unbanked and underserved segments using AI and machine learning algorithms. It’s a totally new way of checking credit scores in the Philippines, with an all-inclusive approach that’s set to reshape the credit scoring process into a fair, inclusive, and highly personalized process.
Revolutionize the way you screen individuals and start improving your credit application processes with FinScore. Partner with us and start streamlining your services with the newest and most comprehensive financial technology in the Philippines today. Send us a message to request a demo.