Not getting approved for that new credit card? Got a bad rate on your personal loans? It probably has something to do with your credit history. Your credit history is the single biggest factor that affects the likelihood of you getting approved for loans or credit cards. It also affects the interest rates you get on the money you borrow; if you’ve got a good credit history, you’ll get the most favorable rates, but if you’ve got a bad one, you’ll get worse ones.
Learn the basics of a Philippine credit report by reading on:
A credit history is an account of how you’ve used your credit over the years that shows your responsibility in repaying your debts. Banks use this history to determine whether you’ll be likely to make payments on time or not.
There’s still no centralized credit reporting in the Philippines like there is in the US, where 300 is a bad credit score and 850 is the best. Because of this, “most big banks either rely on an internal database (record of past and existing clients’ handling of both lending and deposit accounts) or external sources,” says Alex Ilagan, executive director and spokesperson of the Credit Card Association of the Philippines (CCAP), in an email interview with iMoney Philippines. The most common external sources are the Bankers Association of the Philippines Credit Bureau or the CCAP C4 (Consolidated Cancelled Credit Cards) negative file.
Back in September 2013, the Inquirer reported that the Credit Information Corporation (CIC), a centralized national credit bureau, was expected to start operating in December 2014. Jaime Garchitorena, president and CEO of CIC, said in an interview with ANC’s On the Money that the bureau should be up and running by the end of 2015/early 2016.
Until then, there’s TransUnion, one of largest credit reporting agencies, which has been operating in the Philippines since 2011. They’re partnered with BPI, Banco de Oro, Metrobank, HSBC, and Citibank. The partnership created a centralized credit-information system that collects credit data. However, according to Ilagan, “the cost is very prohibitive and access is limited to member banks only,” meaning that banks who have not partnered with TransUnion don’t have access to the reports they provide.
What goes into your credit report?
At its launch in 2011, TransUnion East Asia’s president said that they had “started to gather personal information on credit card borrowers, their educational background, credit record, employment history and other data that would allow banks and financial institutions to manage risks associated with lending,” according to Business Mirror.
Your credit history with TransUnion has the following sections:
- Consumer-identifying information such as name and government-issued identification number
- Account histories of your bill-paying record with credit grantors
- Public records of items that may affect your creditworthiness, including bankruptcies, tax liens and court judgments
- Consumer statement of data in your credit history that you have disputed
- Inquiries, which list the companies that have requested your credit history
TransUnion gets this data from its partner institutions as well as public records. Partner banks can request TransUnion’s information, and along with your other records, they use that information to make decisions. However, an agency like TransUnion doesn’t make a credit decision, that’s 100% up to the banks themselves, they just give information.