June 27, 2022

Market and Financial News

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The current pulse on consumer credit in the Philippines

2 min read

The CIC Credit Report and breaking the stigma of ‘utang

Understanding the concept of credit or “utang” in the Philippines has yet to reach its maturity as reflected by the stigma surrounding it. The word “utang” is still perceived to be synonymous with financial hardship, mismanagement, and vulnerability. This shouldn’t be the case as credit is a tool for financial upliftment that is essential for daily life.

Based on data, the strongest reason why Filipinos are hesitant to acquire financial products and services is the fear of getting into more debt or losing control of their finances. Despite this mindset, there is still a large dependence on informal loans rather than on formal sources, based on the 2019 Financial Inclusion Survey of the Bangko Sentral ng Pilipinas.

To break this stigma associated with credit and to promote a healthy credit culture in the country, the Credit Information Corp. (CIC) has been promoting information-based and risk-based lending, as well as incentivizing borrowers and lenders to act responsibly for their own best interests through CIC Academy webinars and direct availability of CIC Credit Reports through select financial institutions.

As the agency has the mandate to receive and consolidate basic credit data from financial institutions providing credit facilities, it can provide comprehensive information on the credit history and payment behavior of borrowers. Currently housing 34 million unique data subjects, the CIC database is the largest and most comprehensive credit database in the country with the most diverse set of credit data contributors. With all this data, lenders and borrowers alike can access crucial financial information from the CIC to aid them in their credit decision-making.

CIC’s mandate is quite relevant to lenders who are reluctant to extend loans due to the COVID-19 pandemic which has already caused delays in repayment and even defaults. Borrowers, on the other hand, can use their good credit…

Erika Mioten

2022-06-23 21:00:52

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