Unlike other countries, such as Australia and the U.S., credit history is something unheard of in the Philippines. In fact, people who defaulted on their credit card dues will go on committing the same financial mistake and don’t care much about their credit rating. If an agent tells them they will be blacklisted, they are likely to just shrug it off. But because of the growing number of lenders and lending options, the issue on bad credit rating is starting to make waves. This is especially true for people who had their loan applications disapproved due to past financial mischiefs.
So how do you avoid bad credit rating, if you are still in the clear?
Check your credit report
In Australia, you only need to visit the ASIC MoneySmart website to obtain information about your credit history and verify if the numbers are correct. It is unfortunate that no such bureau exists in the Philippines. So the next best solution is to gather your own financial documents and keep a record of all your receipts. Every time you paid off a loan, get a certification of full payment, so any issues you might have with a particular creditor will be resolved with proof.
Avoid getting into more debt
It is a common practice by a lot of us to borrow money to pay off a loan. This is one of the biggest mistake everyone seems to love doing. If you are tempted to open another credit line when you are already deep in debt – don’t. This is the easiest way to fall into the money pit with no way out. Worse, your credit rating will suffer big time. Besides, if you already have bad credit rating, the probability of new credit line being approved is likely to be slim.
Pay your bills on time
One of the reasons for bad credit history is late payments. So, start by paying your bills on time to eliminate this particular hit on your score. A lot of people may say getting back on track is hard, but it is not impossible. Set up an auto or direct debit, so you will have no excuse to pay your bills late. Do anything humanly possible to catch up with late payments to improve your score. When lenders see that you pay on time, they may be less reluctant to lend you money. Simply put, paying on time will be a positive point in your credit report.
Pay off your debts
Did you know that the less debts you have the better your credit rating will look like? So work hard to pay off what you owe in full. Experts suggest that you keep your credit utilisation ratio at 30% or lower. This refers to the total amount of credit you are using, divided by all the credit you have. If you hit 10%, then your bad credit rating would not be so bad anymore.
Talk to lenders
Say you missed a single payment, but you have diligently paid on time most of the time. You can leverage your good standing, by negotiating with lenders to remove their negative report, considering that it is just a one-time mistake.
So, when the time comes for you to buy a new car or a property, it is easier to obtain a bank loan and negotiate for a lower interest rate if you have a healthy credit reputation.
Did you find this article useful? Do you have some ideas of your own that you can share to our readers? Share your experience by leaving a comment below.
