Why Should You Build Your Credit in the Philippines

Credit scoring is a concept somewhat foreign to many Filipinos. After all, the Credit Information System Act was not signed into law until 2012.

Increasing your credit score takes a lot of work, but it is worth the trouble. This notion holds if you are going to acquire debt in the future. Below are the most practical reasons why you should keep it high as much as possible.

Get Your Loan Requests Approved More Easily

When applying for a loan to buy a car in Manila or a residential house and lot in Cavite, your credit score can make the difference between approval and denial.

A lender will scrutinize many things about you, especially your creditworthiness. If you have a history of paying your bills late or defaulting on your loans, your credit score will reflect your past acts of delinquency.

A low credit score does not automatically disqualify you for any loan you wish to obtain. However, it will raise a lot of questions you have to answer satisfactorily. Otherwise, a lender can reject outright your credit request or make life harder for you by requiring you to submit plenty of supporting documents to prove that you can repay what you will owe.

Qualify for Lower Interest

As mentioned, a low credit score will not merit automatic rejection, but getting approved despite the fact will come at a price. To make up for the high risk that a lender will have to take, you will be charged with high interest.

An interest rate represents most of the cost of borrowing. So, the highest it is, the more expensive your loan will be.

If you have a high credit score, though, you can have a bargaining chip you can use to negotiate for a more favorable interest rate. It is not a guarantee you will pay your bill on time and in full every month, but a lender will feel that you are a less risky borrower.

Be Viewed as a Model Tenant

If you are looking for a place to rent, your prospective landlord can look at your qualifications more favorably if you have a good credit score. It might not suffice to demand a lower rent, but at least it can help you talk your way to a one-month deposit from the typical two-month advance payment.

Pay for Insurance Less

Like lenders, insurance companies are super interested in credit scores too. In the eyes of insurers, customers with a high credit score are less likely to miss a payment. As an incentive for you, you might be able to ask for a lower premium or demand a discount.

When it comes to building your credit, it pays to start early and handle your finances responsibly in every chance you get. Request for a copy of your credit report and learn about your credit score through the Credit Information Corporation or an accredited credit bureau in the Philippines known as a Special Assessing Entity.


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