Credit is defined as the ability to obtain goods or services before payment, based on trust that payment will be made in the future. Know more:
CREDIT is defined as the ability to obtain goods or services before payment, based on trust that payment will be made in the future. While it helps empower people to buy a house, a car, or start a business, having access to credit also comes with major responsibilities that need to be understood before proceeding, as managing these responsibilities can affect a person’s credit score.
In the Philippines, credit scores range from 300 to 850, with 850 being the highest rating. The higher the number, the easier it is for an individual to access various financial services, credit options, and favorable interest rates, as banks and other financial institutions use these scores to assess an applicant’s ability to pay back debt.
As the need for credit access grows, it’s important to debunk certain myths surrounding credit scoring in the Philippines and why they are not true in today’s financial landscape.While access to credit does come easier to consumers with an established financial footprint, more opportunities have arisen to bring more unbanked Filipinos into the formal financial system.
This depends on your credit utilization ratio—the amount you owe in comparison to your credit limit . The lower the ratio, the better your credit score. Increasing your credit limit lowers your credit utilization ratio. If your spending habits stay the same, your credit score could improve. However, drastic increases in spending coupled with an increased spending limit could risk negatively impacting your credit score.
This is where the importance of credit monitoring comes in. Credit monitoring is the process of routinely reviewing your credit score, credit history, and credit reports. Additional findings from the TransUnion Consumer Pulse Study show that 95 percent of Filipinos believe in the importance of credit monitoring, with 53 percent monitoring their credit at least once a week.
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