How to check and improve you credit score in the Philippines
Having a good credit score does wonders to your finances. But what if you’ve accumulated too much debt or skipped several payments? Your credit score will surely take a hit and lenders would hesitate to grant you more loans, which could be problematic especially when you need it the most. You will be charged higher interest rates or offered lower spending limits.
So how do you check your credit score in the Philippines? And how can you improve a bad credit score?
What is a credit score?
A credit score is a figure which reflects your credit history, accounts, payment habits and financial information. Banks and other institutions rely on this score to know how creditworthy you are and if you can repay your obligations in a timely manner.
Some credit institutions use numbers for credit scoring while others use letters. For credit institutions that use numbers, a credit score ranges from 300 to 850.
If you have a high credit score, lenders will be more likely to grant you loans with competitive rates and higher credit limits. On the other hand, if you have a bad credit score, you will have a hard time securing loans, credit cards and other financial tools. In some cases it might affect your employment, too.
Factors that affect credit score
- Credit and payment history - the loans and credit cards that you have, and how often you’re applying for a new loan or credit card. This also includes your payment history on utilities, phone bills and installment contracts.
- Amount that you owe from creditors - the amount of your outstanding loans and credit, if any.
- Length of credit history - the length of time any of your accounts have been reported as open.
- Types of credit that you currently have - credit cards, personal loans, auto loans, mortgages, etc.
What is CIC and why is it important to my credit score?
In the Philippines, the Credit Information Corporation is the body which consolidates and provides access to reliable credit information. The CIC is headed by the Securities and Exchange Commission (SEC) chairperson.
That means the CIC has the power to collect your credit data from multiple sources and present you your credit history as requested.
The CIC is an important repository of credit data. You must regularly check your credit report to have an overview of your credit history, to protect yourself from fraud or identity theft and to prove your creditworthiness.
These are the types of information submitted to the CIC:
- Your personal and contact information
- Government numbers (e.g. TIN, SSS, etc.) and IDs (e.g. passport, driver’s license, etc.)
- Employment information
- Installment details
- Utility subscriptions
- Loan contracts
- Credit card details
These factors will form the basis of how to compute your credit score. This is why banks and lending companies like UnaCash require you to fill out forms and submit proof of identiy.
How to know your credit score in the Philippines
Now, you might be asking yourself, “How to check my credit score in the Philippines?”
The only way to know your credit score is by asking for a credit report. In the Philippines, you can request for a credit report from the CIC.
You can request a credit report from CIC through one of its accredited credit bureaus, CIBI Information Inc. Here are the instructions:
- Go to the CIBI web app at https://cibiapp.cibi.com.ph/#/login. You can also download the CIBI App on the App Store or Google Play.
- Type in your personal information and enter a username and password.
- Upload the following: a. 1 primary ID (SSS, TIN, GSIS, UMID or driver’s license) b. 1 secondary ID (passport, voter’s ID, senior citizen ID, SSS ID, digitized postal ID, GSIS e-card, PRC ID, IBP ID, OWWA ID)
- Schedule an appointment for character verification through video call. You can schedule from Monday to Friday, 8:30 am to 5:30 pm.
- Wait for the confirmation email to be sent to your email address.
- Undergo the e-KYC process on your appointment date.
- Pay the fee using accredited CIBI payment partners.
- CIBI will email you your credit report after a successful character verification and payment.
You can also go to the CIC office personally at Legaspi Village, Makati City to request your credit report.
How to improve your credit score in the Philippines
Build good credit history as early as possible
Even if you have been working for only a year, don’t be afraid to apply for a loan or credit card! You will find that banks can happily grant you a loan or credit even if you’re just starting out in your career. Just make sure that you can pay it off on time and without penalties.
1. Pay off existing debt
Wag mo nang hintayin na lumobo pa ang utang mo! Not only will paying your debt give you a peace of mind, it will also give banks and lenders the impression that you have the capacity to repay every loan or credit. And trust us, you don’t want to be saddled with penalties and late payment fees!
2. Avoid late payments. Always pay on time.
Sometimes, we skip out on our due dates for various reasons. It can be understandable if you miss a due date one or twice. But not regularly paying your bills on time can tank your credit score. To avoid this, set a reminder before every due date or automatically deduct payments from your bank account, and keep track of every outstanding bill.
3. Be mindful of your credit limit
Do not go over your set credit limit. Going overboard on your credit cards gives lenders the impression that you’re highly dependent on credit. This can lead banks to assume that you’re spending more than you’re earning and will lead to a lower credit score.
On the other hand, you can request for an increase in your credit limit if you want to lower your debt-to-credit ratio. To help you get approved for a credit limit hike, make sure that you have a good standing with your bank and that you pay your CC bills on time and in full.
4. Consolidate your credit debt
If you’re finding it hard to pay off all your debts, you can look into consolidating them all into one account with lower interest rates. For example, a balance transfer credit card has interest rates ranging from 0% to 2%, so most of your payments will cover the principal balance instead of the interest.
5. Try not to apply for a loan and credit card at the same time
Do not apply for a loan and a credit card at the same time! This also applies to inquiring about a loan and a CC simultaneously. Doing so will send the message that you are desperate for money. Instead, if you’re planning on a big purchase, save for it ahead of time. If you really have to resort to a loan or credit card, choose the option that suits your wallet best.
6. Split your payments into installments
Another way to improve your credit score is by splitting your payment into installments. For example, you can pay your credit card bill twice a month. You can make one payment on the closing date, then make the next payment on the due date.
How long does it take to improve my credit score?
The time that will take you to improve your credit score will depend on the reason why your credit score is low in the first place.
It will be easier for you to improve your credit score if you have just begun your credit history. Just use your credit card accordingly and within your credit limit. Pay your bills on time and avoid late payments. On average, it can take you three months to improve your credit score if this situation applies to you.
Unfortunately, it can take you a longer time to improve your credit score if you have missed payments on loans and CCs. It’s much worse if you default or declare bankruptcy. Depending on your starting credit score, it can take you 7-10 years to bounce back.
Whatever the reason for the dip in your credit score is, you can expedite the improvement by sticking to healthy credit habits and getting your finances in order.
1. How to know my credit score in the Philippines?
To know your credit score in the Philippines, you can request for a credit report from the Credit Information Corporation (CIC).
2. How can I boost my credit score?
You can boost your credit score by paying on time, building good credit history, being mindful of your credit limit, consolidating your debt, paying in installments and not applying for a loan and CC at the same time.
3. How long will it take me to improve my credit score?
Depending on the reason why your credit score is low, it can take you months or even years to improve your credit history.
4. What are the effects of a low credit score?
If you have a low credit score, banks and financial institutions may reject your loan or credit application. If they do grant your application, you may be given unfavorable rates and terms. It can also affect your insurance and employment prospects.
Key Takeaways on Improving a Bad Credit
A good credit score is key to building a healthy credit history. If you have a healthy credit history, banks and financial institutions are more likely to trust your paying ability. There are necessary steps that you must take to maintain or improve your credit history.