Best conditions with a good credit rating
A credit score is an indicator on which the approval of a loan application by a bank depends. This parameter is calculated based on the customer’s financial history. The lowest score is 300 points, the highest is 850. Often people don’t know about the need of a credit score improving until a loan is denied. In order to avoid this, you should carefully monitor your credit history with banks.
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How to determine the credit score
Once a year, every Filipino citizen can receive a free report from the Centralized Register of Credit Data (CIC). In order to obtain access, you must provide personal information. Also, such information can be provided by an accredited bureau:
- TransUnion;
- Compuscan;
- CIBI Information, Inc .;
- CRIF.
An extraordinary report on your financial affairs can be made for additional money. The amount is not high, and you will find out whether you need to improve your credit score or not. When you plan to take a serious loan, it’s better to be safe.
Why it is important to improve the credit score
If the results showed that the number of scores is not enough, you need to immediately take action. Otherwise, there will be difficulties with loans and credit cards obtaining. During an application formalization, the loan amount will be limited, while the interest rate will increase. A low creditworthiness level can play an important role in the preparation of insurance or a legal transaction. Many employers check the financial history of candidates so as to further verify their responsibility.
What determines the number of scores
When calculating the rating, several criteria are taken into account:
- accuracy of loans repayment;
- length of history with banks;
- history of credit limits spending;
- types and number of loans taken.
Income, information about bank accounts and assets, age and sex do not matter during scores calculation. Sometimes the answer to the question on how to improve the credit score immediately lies in the CIC report itself. There may be inconsistencies that can be used. If you bring a competent lawyer to the issue, there are chances that your story will be seriously cleared. It means higher amount of scores.
How to improve your credit score in the Philippines
It is not worth it to count on the mistakes of CIC employees. We will tell you how to improve your credit score using traditional methods. There are several classical solutions:
- to repay all loans immediately or to reorganize the loan;
- to take more small loans;
- to create a new card (if you haven’t got any), to activate the old ones;
- to increase the credit limit;
- to regulate the use of credit cards.
Calculate the best loan option for your rating
Loan repayment or reorganization
Not everyone has the opportunity to immediately repay loans on all cards. In this case, reorganization is recommended. When calculating scores, the loan-to-limit ratio is taken into account. By optimizing this balance, you will be able to improve your position. There is a service that allows you to consolidate all loans into one account in order to simplify the repayment process. Increasing of the limit on a card can also have a positive effect. It is not so easy to do, but it’s possible. Try to explain the situation to a manager. In such cases, often customers are accommodated.
Credit cards
If you still haven’t had a credit card, the score will be minimal. The reason is simple: a complete lack of information about the customer. You need to get a card and to use it for payments, without using the limits. You won’t even notice how your credit score will be improved up to a high lever. Don’t forget about your old cards. Having accounts with a long credit history is an advantage for the auditors. The extensive activities are not necessary. You should simply demonstrate to the bank that you are using the product.
New loans
The more new loans you repay on time, the “purer” the history will become. The getting of short-term loans helps in order to speed up the cleaning process. You shouldn’t take loans if there is no absolute certainty. If you have any problems with repayment, you will lose a few scores again. Apply for small loans, which can be easily re-borrowed if necessary.
Accuracy
The repayment history determines the final score by about a third. Any delay reduces the rate. At the same time, the fall continues as long as the loan remains. It is equally important to manage the credit card competently. A lot of people comfortably use card limits, without thinking that every such case becomes a red signal for the auditors. Try to pay only with your money. In extreme cases, contact your friends. There are enough ways to improve your credit rating fast in the Philippines. If you treat your financial history carefully, you won’t have serious problems with loans.
Example of calculating interest and loan payments
| TERM | 10 days | 20 days | 30 days |
|---|---|---|---|
| LOAN AMOUNT | 5000 PHP | 5000 PHP | 5000 PHP |
| FEE | 1% | 1% | 1% |
| INTEREST AMOUNT | 500 PHP | 1000 PHP | 1500 PHP |
| TOTAL REPAYMENT | 5500 PHP | 6000 PHP | 6500 PHP |
Written by Mikka Montero | Modified date: February 13, 2020
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