Though more and more Filipinos are gaining access to banks and other investment instruments, it is undeniable that many Filipinos still remain unbanked. These are people who don’t make use of any banking services, including debit cards and checking accounts, as well as savings accounts. In the latest Financial Inclusion Survey (FIS) of the Bangko Sentral ng Pilipinas (BSP), more or less 77 percent of Filipinos fall under this category.

In contrast, there are also those who use banking services to a degree, just not the full slate of services; these people are the underbanked. Typically, an underbanked Filipino owns a debit card to his name but refuses to apply for a credit card or a loan. The reason behind that is the fear of having their applications rejected, simply because they are unaware of their financial well-being.

Credit scoring is one way to address the fear of acquiring for a loan. One of its benefits is understanding where you are financially, to pave the way for well-informed decisions when it comes to managing funds.

Credit scoring has been in use by lenders all over the world for more than three decades. Trust that the top lending companies in the Philippines acquire services like this to create an effective decision matrix that can strategically weigh your loan requests and pending debts.

The range of a credit score would instantaneously give an indication what type of borrower you are. Your score helps the lenders analyze what mode of credit interest or payment terms to give. Citing the world-renowned FICO Score range, credit scores can range from 350 as the lowest to 850 as the highest.

High Risk Borrower — if your credit score fell on the lower bracket, you may be considered as a high-risk borrower. In order to protect their business interest, lenders may decide to provide a higher interest rate, shorter payment terms or even deny your loan application.

Medium Risk Borrower — if your score appeared on the middle range, you may be tagged as a medium risk borrower. Lenders may decide to give you the minimum interest rate or regular duration on your payment terms.

Low Risk Borrower — if your credit score is evident on the higher array, then the lenders may consider you as low risk borrower. Low risk borrowers enjoy lower interest rates and longer payment terms as the lenders are assured that they are dealing with a good and responsible borrower.

The risk bracket of the whole credit score range varies depending on the risk appetite of the lender.

So, how can you keep a good credit score? Below are three simple steps to determine and maintain your creditworthiness:

Find an accredited and legitimate credit bureau that offers services, such as credit scoring or financial benchmarking. Credit score is a numerical expression ranging from 300-850, which represents your credit score. A good credit bureau provides viable resources and technical know-how so you can have an appropriate credit score suited for your credit record.

Understand what constitutes as a good credit standing among financial institutions to maintain a high credit score and improve your chances when applying for financial services. Keep in mind that a good credit score can be used to negotiate more deals and gain access to better loan approvals and contracts!

When deciding to apply for a loan or making purchases, you should consider how such actions will affect your current credit score. Analyze the importance of that loan or purchase as it can ultimately affect your transactions in the future. Ask the questions: “Is this worth it?” or “Will this contribute positively to my financial well-being?”

CIBI Information Inc., the Philippines’ first and only local credit bureau since 1982, developed the country’s benchmark for globally-accepted credit scores, which supports the financial growth of every Filipino locally and abroad. Their credit score brand is called myScore: The CIBI Bureau Score, represents the payment risk of your current and potential credit standing as well as assesses whether you are likely to pay as agreed or if you are worthy for lenders to extend credit to.