Let us say that you are excited about a new product you would like to purchase for your affordable BRIA home. You wanted to buy an upgraded refrigerator for your kitchen space. Right now you lack the necessary finances, hence you may consider the option that you can still apply for a modest loan to cover it. So, you decided to go to a bank that can provide you with financing for your much-needed loan. You appear to have all of the qualifications and requirements met, such as solid employment and a steady paycheck. However, the bank then informs you that they cannot provide you with the credit now. What else could have prompted the bank to refuse your loan application if everything appears to be in order on your part? Financial institutions and other bank entities simply cannot give loans to anybody without a solid foundation. Before accepting or denying a credit card or loan application in the Philippines, banks and financial institutions place huge importance on the borrower’s credit score. You may have come across credit scores when going about your business across financial institutions and banking. This could appear to be a meaningless number at first glance, but it actually has a great deal of influence, especially when it comes to receiving a grant for a credit card, a loan, or other comparable lines of credit. In this article, you will find out about how to get a good credit score in the Philippines and the different guidelines for maintaining a good credit score.
Read also: Perks of Using a Credit Card for your Home Purchase
What is a credit score?
Your credit score is a three-digit number based on your ability to deal with financial commitments and debt, such as repaying loans or credit card bills. Your credit score is determined by your credit history. Banks, insurance providers, and credit businesses use your credit score to determine your eligibility for loans, credit, and other financial services. This is why it is critical to establish wise financial behavior from the moment you receive your first credit card or take out your first loan in maintaining a good credit score.
How to get a good credit score in the Philippines?
The Credit Information Corporation (CIC) is in charge of credit rating in our country. In the Philippines, credit scores vary from 300 to 850, with 850 being the highest grade. In maintaining a good credit score, your credit score should be as high as possible. Falling around the 650-699 or 700-759 range is also a common practice. Anything less than 600 is considered a poor or terrible credit score. Here are seven (7) habits that can help you how to get a good credit score in the Philippines:
- Establish a strong credit score as soon as you can
Have you received your first credit card at a young age? Congratulations! Now, be careful to utilize it correctly. Make sure to swipe wisely! Considering your credit card transactions account for a significant portion of maintaining a good credit score. It will also determine if you are authorized for new loans.
- Consistently pay your dues on time
Payments must be made on time for all bills, not only credit cards and loans. It is critical to settle your credit card bills and other loans on time, notably because a record of late or missed payments may result in a fall in your credit score. Install your bank’s mobile banking software or a money management application to stay on top of your transactions and deadlines in order to never skip one. You may also enroll your payments in an automated-debit arrangement, which eliminates the obligation to pay your fees individually.
- Stay within your limit
Your credit available is the amount of credit remaining on a line of credit or credit card. Credit scoring systems include how near you are to “maxing out,” so keep your balances modest in comparison to your entire credit limit. This is equivalent to your credit limit less your outstanding balance. Verify to see if you’re not overspending or maxing out your credit lines, since this may leave a negative impact on your credit score. If you terminate some credit card accounts and consolidate the majority or all of your credit card balances in one card, your credit score may suffer if you use a large proportion of your entire credit limit. Credit consumption should not exceed 30% of your overall credit limit, according to experts. Even if you intend to pay off the sum when your payment is due, spending more than 30% of your credit limit is dangerous. Card companies normally report the balance when your statement closes, so that’s the figure you’ll see on your credit report. You do not have to rely on credit cards in maintaining a good credit score.
- Refrain from making several or consecutive loan or credit card applications
Credit scoring systems use your current credit behavior to determine your creditworthiness. If you request a lot of loans in a relatively short amount of time, lenders may believe your financial situation has deteriorated. Deliberately stretch out your loan applications. Even better is to pay off your current debts prior to actually filling out a new one.
- Do not fall behind on your credit cards or loans
When you cease paying obligations on a debt, such as a credit card or a loan, you have gone into default. Defaulting on the credit card or loan payments severely lowers your credit score. If you do not pay your credit card or loan for a specified length of time, which is typically up to 180 days, banks or loan providers may terminate your account and for secured loans, they may take your asset. They will then declare or transfer your account to some debt collection company.
- Examine your credit reports for discrepancies
Another strategy for maintaining a good credit score is to review your credit report for inaccuracies on a regular basis. You could be doing just about anything correctly, but other people may not. And mistakes might have a negative impact on your credit score. Question any suspicious inconsistencies you find in your credit report. Maintain a watchful eye on old credit card accounts which you are not using to ensure that no unauthorized person is misusing them. Monitoring your credit report on a regular basis allows you to spot errors earlier, allowing you to repair them which is vital in maintaining a good credit score.
- Keep communicating with your loan provider
If you find yourself far behind your obligations, notify your creditors right away. Often these lenders are prepared to work with you to put in place alternate payment arrangements, especially if you contact them about your circumstance as soon as possible.
Regardless of whether you are searching for a credit card or a loan, maintaining a good credit score in the Philippines may have a big influence on your financial capacity. A strong credit score suggests financial dependability and accountability. Therefore make it a practice to check your credit report and credit score on a regular basis to figure out whether you need to boost them.
Read also: Can you use your credit card on a home purchase?
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Read more here: BRIA Homes Digos and Kidapawan End 2022 on a high note
Written by: MC Sanchez