Your credit score is arguably one of the most important pieces of information about you and about your overall financial standing.
Many Filipinos think that a credit score only matters when you need to be approved for a loan or a credit card. However, your credit score can affect many things, from insurance rates to employment opportunities.
What is a Credit Score?
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 is a financial scorecard that plays a vital role 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.
How to Know Your Credit Score in the PH
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 PH is by requesting a CIC credit report in person or applying for your credit score through the CIBIApp web application.
How to get your CIC credit report
To get a copy of your CIC credit report, you need to first visit the CIC website and:
- 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.
What does the credit report contain?
The credit report contains your basic information such as your name, SSS/GSIS numbers, TIN, employer information, place of residence, and business. The credit report also contains information on utility subscriptions, loan contracts with lending institutions, and other obligations the CIC is authorized to collect. This information allows 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 compared to those with poor track records of payment.
How do lenders compute my credit score?
Credit scores are calculated differently by lenders in the Philippines and are ultimately dependent on their credit scoring models. You may also have different credit scores depending on the type of loan application. For instance, a mortgage lender might use one scoring model, while an auto lender uses another.
However, there are generally similar ways to check your credit score, such as:
- Payment history
Payment history includes the number of accounts paid as agreed, delinquent accounts, and negative public records or collections.
- Types of credit used
This refers to the total number of accounts and types of accounts you have (mortgage, installment, revolving, etc.). If you have a mixture of various account types, you can usually generate better scores than reports with only several revolving accounts (credit cards).
- Used credit vs. available credit
Creditors and lenders in the Philippines also check how much of your available credit you’re using. They like to see that you’re responsible with credit and paying credit card bills regularly and on time. If you have credit accounts that are at their limit or “maxed out,” this may impact your credit scores negatively.
- New credit
Credit score calculations also consider the number of new credit accounts you’ve opened recently.
Why are credit scoring alternatives needed in financial services?
Unfortunately, the traditional credit scoring employed by financial institutions in the Philippines is unable to measure the credibility of the unbanked and underbanked, making 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 the majority of 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.
Because a significant percentage of the population remains underserviced, financial institutions are now putting in place alternative ways to better measure the credibility of potential borrowers, using financial technology partnered with alternative local data providers.
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, forcing consumers to borrow funds at unfavorable, even usurious, interest rates.
Today, FinScore has changed the landscape of banking and loan screening in the Philippines and abroad with the introduction of alternative credit scoring. With FinScore, the unbanked now have access to loans and other financial services that were once inaccessible to them.
How do fintech companies like FinScore determine credit scores through telco data?
We score consumers based on telco data such as text usage, call usage, data usage, top up, locations, time since activation, sharing of top up credit (Pasaload), and other types of data that we can aggregate based on mobile phone usage. This allows us to provide credit scores for all types of applicants, not only for those with reports from credit bureaus.
We have the largest available information base in the Philippines, which has allowed us to perform credit score ratings for each and every Filipino. With our efficient and reliable alternative credit scoring process that utilizes 100% telco data coverage, we can provide the whole Filipino population with credit scores that are not only easier to access, but also reflect reliable data for better screening. The credit scores are also processed in less than a second, providing real-time data with no action required from the applicants.
With the use of AI and machine learning algorithms, we can provide companies with valuable information on unbanked and underserved customers in the financial system. This highly predictive process also provides useful insights on banked customers.
It’s a totally new way of checking credit scores in the Philippines, with an all-inclusive approach that’s set to make waves in the financial industry. It’s reshaping financial expectations, as we help shape credit scoring into a fair, inclusive, and highly personalized process.
Interested to know more? Contact FinScore today and find out about telco data scoring’s bright future.