I love my international readership, and I wanted to cover some helpful financial tips for my Filipino audience.
Too few Filipinos are familiar with their credit score and how this can impact their chances of getting approval for loan products and credit lines. For the most part, this can be chalked up to the limited number of avenues for individuals to access their credit scores. Plus, most people only wonder about this number when they’re in the middle of the process of credit card application Philippines’ banks often require new users to undergo.
Still, if it’s in your plans to get a credit card soon, a good credit score is essential for your chances of approval. Even without constant access to your score, it’s important to work on building and maintaining a healthy credit standing. This way, when you apply for a new credit card, you can make a better impression as a responsible borrower.
Many factors can bring down your credit score, but by addressing these common issues, you can improve your creditworthiness in the eyes of potential creditors:
1) Lack of Credit History
Having little to no credit history is a common issue for consumers in the Philippines. If you’ve never applied for a loan, used a credit card, or taken out any kind of credit, then you have little to no record that financial institutions can use to evaluate your trustworthiness as a borrower. Without a history of borrowing and repaying, lenders may find it difficult to assess your risk as a client.
Address this issue by applying for entry-level credit products like a secured credit card or a small personal loan, which are often easier to qualify for. Once approved, make consistent, timely payments to help you build your credit history over time.
2) Late or Missed Payments
Whether it’s for a loan, credit card, or even utility bills, falling behind on payments signals to lenders that you may struggle to manage your financial obligations. Each missed or delayed payment can stay on your record for months or even years, and this can drastically lower your score.
Stay on top of your payments by setting reminders or automating payments if possible. If you’ve had late payments in the past, make an effort to consistently pay on time for several months to show creditors that you’re back on track.
3) High Credit Card Balances
If you already have a credit card, a high balance relative to your credit limit can negatively impact your score. This is due to what’s known as your credit utilization ratio, or the percentage of your available credit that you are using. Consistently using most or all of your credit limit suggests that you might be over-reliant on credit, which is a red flag for lenders.
To improve this, aim to keep your credit utilization below 30 percent of your credit limit. Paying down existing balances or requesting a credit limit increase while maintaining the same spending habits can help improve this ratio.
4) Multiple Loan Applications
Every time you apply for credit, lenders perform a “hard inquiry” on your credit report, which is something that can temporarily lower your score. Multiple applications in a short period of time can signal to lenders that you’re desperate for credit, which creates the impression that you’ll be a riskier borrower.
Instead of applying for several credit cards or loans at once, carefully research the products that fit your needs and apply for just one or two. This way, you’ll be able to reduce the number of inquiries on your credit report and avoid further harm to your credit score.
5) Unpaid Debts
Unpaid debts, whether from loans, credit cards, or other financial obligations, will drag your credit score down even further. These outstanding debts show lenders that you’re not fully managing your existing responsibilities, which would of course make them hesitant to offer you more credit.
Make it a priority to pay off your unpaid debts before applying for a new credit card. If paying the entire balance isn’t feasible, consider negotiating a payment plan with your creditor. Showing an effort to reduce or eliminate your debt will demonstrate to future lenders that you’ve taken the steps to regain control of your finances and will be ready for more financial privileges in the future.
6) Unstable Employment or Income
While your employment status doesn’t directly affect your credit score, it is still an important factor when applying for a new credit card. Lenders want to ensure that you have a stable income and can make regular payments. If you’re aiming for a second credit card like the Landers Cashback Everywhere Credit Card by Maya, a two-in-one credit card and membership card for shopping at Landers Superstore, wait until you can demonstrate proof of stable employment or income.
You may have struggled with some of these issues in the past, but remember that it’s never too late to improve your credit score. It’s still possible to address any outstanding concerns and show potential lenders that you are making a conscious effort to be more financially responsible. This can help you not only get approved for a new credit card but also secure better terms and interest rates for it. After all, the ultimate goal for achieving a good credit score should pertain to more than opening the door to more financial opportunities—it should also involve building a strong foundation for long-term financial stability
