Man checking his credit score
Man checking his credit score

How to Improve Your Credit Score in the Philippines

Credit scores are incredibly important information about your financial standing. In the Philippines, credit score isn’t always well-discussed, but it can affect major aspects of your life such as loan approvals and even employment opportunities. This is why discussions on how to improve your credit score in the Philippines are crucial.

How To Improve Your Credit Score

Your credit scores are an indication of how financially responsible you are. They are what many financial institutions use to determine the approval of many of your financial ventures. If you’re hoping to have loans approved, having a good credit score is always essential.

Philippine financial institutions calculate your credit scores much like US and European credit checking organizations. Generally, we follow the same rules–albeit a little less stringent. Building your credit score in the Philippines doesn’t really deviate from the best practices abroad.

We’ve compiled a list of what you can do to raise your credit here in the country:

a shopper swiping his credit card

Acquire A Credit Card

If you have been wondering how to best improve your credit score, then the answer lies within credit cards.

For many Filipinos, the prospect of getting a card isn’t appealing. This is mostly because we’ve been taught that credit cards lead us to debt. While credit card debt does happen, it’s easily avoidable with responsible credit card usage.

Getting a credit card as soon as you can lets banks and other financial institutions see how financially responsible you are. With a credit card, you can prove that you can manage your finances and pay fees on time. As long as you are a responsible credit card holder, you can easily get your credit score up.

Avoid Late Payments

As a rule, late payments should be a definite no-no. Not only do they show financial irresponsibility, but they also add to your burdens. Paying your card’s minimum is an option, but that means you’ll have a bigger debt to settle the next cycle.

A good way to avoid late payments is to pay your bills early or twice a month. Early and consistent payments will get recorded by banks and will serve as evidence of your financial responsibility. In the case you do pay late, make sure to keep things noted and pay off debts as soon as possible.

a man calculating his debt

Pay Off Debts Or Minimize Them

If you have a lot of debt, then you won’t get to experience the benefits of a good credit score. A large debt severely damages your credibility. Beyond the amount itself, you should also look at how much you owe compared to your credit limit.

Look at your total credit utilization. If you do have debt, your best chance of getting a higher credit score is by keeping that number as small as possible. Of course, paying your debt is also essential. The best option is to pay it in one go, but if you can’t, you should keep it to a minimum or manageable amount that you can pay off.

Stay Within Credit Card Limits

A good rule of thumb among credit card holders is to not go beyond your card’s limit.

Going over your credit limit can be pretty easy, considering that many establishments have turned to cashless payments. However, going over your limit can have drastic effects on your credit score. Not only that, but you also get charged a penalty fee.

Thankfully, most credit card companies do alert you when you are nearing your limit. If you don’t get alerts, you can also monitor your spending with online applications. Choose whatever is effective and easy for you–just make sure that you don’t go overboard with spending.

A woman working on her budgeting and savings

Develop Good Financial Habits Early

One of the biggest questions asked around is how to get your credit score up if you don’t have a credit card. Fresh graduates and even young professionals often struggle to get credit, mostly because of their lack of cards. However, that doesn’t mean you can’t do anything about it.

If you can’t get a credit card for now, then start building your foundations. A savings account is a good option, regardless of the amount you deposit. You can also look at ventures where you can invest in to help your case. The more that you show potential lenders and banks that you have solid money habits, the better.

Besides that, reading about how to know your credit score and researching about the different financial ventures you can do is also good. Boosting your credit score can be work, but knowing the basics is always helpful. Read up on financial knowledge and literacy, compare and contrast loans and cards, and enrich your financial know-how to get a better foundation.

Apply For Different Loans Or Finances

When institutions calculate credit scores, they don’t just look at credit card usage. Since your credit score reflects your overall creditworthiness, it’s going to look at a lot of other factors. One way to boost your value is to apply for different loan types.

Being able to pay for a personal loan lets institutions see that you are a financially responsible individual. If you also have a credit card, it also adds to your value. Provided that you are able to pay for both, having a personal loan and a credit card signal to financial institutions that you are a valuable customer, and it instantly boosts up your credit score.

a report showing a high credit score

Take One Step Closer To Financial Wellness Today

Credit scores play a significant role in your financial health. With a high credit score, you are more likely to get approved for loans of higher value. Moreover, it also allows you to have more financial stability, freedom, and peace of mind.

Undoubtedly, acquiring a credit card will assist you in building your credit score. However, considering the country’s credit landscape, there are definitely other means of building your score aside from getting a card. With alternative data, FinScore helps banks and financial institutions see your credit worthiness more holistically.

FinScore is a financial technology company in the Philippines that offers a powerful credit scoring platform and fraud detection tools based on alternative data, including telco-based data. 

As the pioneer in lending and scoring of the unbanked, we continuously provide fintech services that empower financial institutions, banks, and credit bureaus with flexible platforms to help them make insightful and reliable credit decisions. Contact us today to learn more about our products and solutions for financial institutions.