What is a Credit Report and Why Do I Need it?

Are you serious about getting your finances in good shape? If the answer is yes, a document you should be checking is your credit report.

If you’ve never seen yours, it’s time to understand what a credit report is and why it’s important in your adult financial life.

Here are the basics of credit reports in the Philippines every Filipino needs to know.

What is a Credit Report?

A credit report is a document that sums up your credit history including your loans and credit card accounts. An objective measure of your ability to repay a debt, it shows how much you owe and how much and when you’ve paid off the debt.

What is the Difference Between a Credit Report and a Credit Score?

Although they’re both used to assess a borrower’s creditworthiness, a credit report and a credit score are two different things. Don’t confuse one with the other.

Your credit report is a detailed account of your credit history, while your credit score is a three-digit number that represents the data in your credit report. Your credit score is calculated based on your credit report.

Read more: What is a Credit Score and Why Should I Improve It?

How Credit Reporting Works in the Philippines

How Your Credit Information is Collected

Companies and financial institutions you do business with submit information on your financial transactions, including your payment history, to the Credit Information Corporation (CIC).

The CIC is the public credit registry and repository of credit information in the Philippines. Republic Act No. 9510^[1] or the Credit Information System Act (CISA) authorizes the CIC to receive and collate basic credit data from the following entities^[2] into credit reports:

• Banks (universal, commercial, thrift, and rural)
• Credit card companies
• Private leasing and financing companies
• Government-lending institutions (GSIS, SSS, and Pag-IBIG Fund)
• Cooperatives and cooperative banks
• Microfinance institutions
• Telecommunications companies
• Insurance companies and mutual benefit associations
• Utility companies (electricity, cable providers, etc.)

What Shows Up on Your Credit Report?

Credit reports contain three types of information:

• Personal and/or business accounts
• Loan accounts
• Credit card accounts, installment, and/or non-installment contracts

Credit reports include both positive data (timely debt payments) and negative data (late payments or non-payments)^[3] .

Sample individual credit report from the CIC

1. Personal/Business Information

For individual credit reports, this section includes the name, birth date, address, contact information, employment data, TIN, SSS/GSIS number, and other details on the borrower’s government-issued ID.

A credit report for business includes the company name, address, registration date, gross income, monthly expenses, and contact details, among others.

2. Loan Contract Information

This section shows details of your past and present loan contracts with banks and other companies. If you’ve had a car loan, personal loan, or mortgage either as a principal borrower or co-borrower, it reflects on your credit report.

Your utility and telecommunication subscription (e.g., cable TV, mobile postpaid plan, etc.) also appear on the document.

Particularly, credit reports list down detailed information on the following:

• Loan types
• Loan amount
• Account balance
• Payment history, including overdue payments
• Contract start and end dates

3. Credit Card Account Information

There’s a separate section for credit card records and details, which include the account balance, status, credit limit, and payment history for each credit card owned.

How CIC-Accredited Credit Bureaus and Lenders Use Your Credit Report

Aside from gathering and consolidating credit information, the CIC also provides different entities in the Philippines with access to credit reports.

For example, credit bureaus (also called credit reporting agencies)—specifically CIC-accredited credit bureaus or special accessing entities—use your credit data to calculate your credit score.

Meanwhile, CIC also has its accessing entities or those financial institutions submitting credit data to the CIC database. The CIC, of course, authorized such entities to access credit data.

When you apply for a loan, credit card, utility subscription, or mortgage, the lender or cooperative/utility/financing company may check your credit report, credit score, and other relevant information (income, business/employment data, etc.) to determine whether to approve or reject your application.

Why are Credit Reports Important?

Credit reports aren’t often talked about in the Philippines, but they do matter. Here are three good reasons to check it regularly.

1. Get Fair and Objective Credit Evaluation

The data in a borrower’s credit report helps a lender evaluate the risk of lending money to that person. Because this document shows your actual credit history, the lender can make a fair and objective decision on your loan or credit card application.

A good record of timely payments as reflected on your report helps you get a low-interest rate on a loan or an approval for a credit card with great rewards. Conversely, poor debt payment track records lead to either a denial or a high-interest rate.

2. Improve Your Creditworthiness

Checking your  report helps you find out if your accounts are in good standing and if you can qualify for loans and credit cards.

Beyond knowing your creditworthiness, having a copy of your credit report also allows you to catch errors and signs of identity theft that can negatively affect your credit score. In doing so, you can take steps to fix your credit score.

If you detect any inaccuracy in your credit report, you can request a correction with the concerned financial institution. This will help you improve your creditworthiness and your chances of getting approved for loans and credit cards. You may also file a dispute with CIC through its Online Dispute Resolution Process (ODRP) if you find any inaccurate, outdated, or incomplete information on your CIC credit report.

3. Achieve Your Financial Goals

With positive credit information, your report can vouch for your financial reliability to lenders, helping you get better rates for a new house or car. It may also help lower your insurance premiums.

By tracking your payment history, you can identify patterns, both good and bad. If you notice you’ve been making only the minimum payment on your credit cards (which deters you from getting approved for a loan), it will serve as a wake-up call to consistently pay your balance in full.

How to Get a Copy of Your Credit Report

Below is the process of getting your report from the CIC.

1. Schedule an appointment online through the CIC Online Appointment Scheduler (“CICOAS”) through this link.

(Note: the issuance of CIC credit reports to walk-in clients is temporarily postponed until further notice. Follow the CIC on Facebook for updates about this.)

2. After securing an appointment date with the CIC, appear in person at the CIC office during the scheduled time. As of date, CIC requires face-to-face transaction as it is still in its inception stage of providing credit reports. It will issue an advisory once online processing is already available.

3. Validating your identity using at least two (2) unexpired government-issued identification cards.

4. Pay PHP 55 for your report request. (You can do this on-site)

5. Your credit report will be drawn by the CIC.

6. Once drawn, the CIC may request for additional validation to ensure your identity.

7. You will receive your CIC Credit Report via email on the same day.

You can also get your credit report through any of the CIC’s accredited credit bureaus:

• CIBI Information, Inc.
• Compuscan Philippines
• CRIF Philippines
• TransUnion Philippines

Final Thoughts

One of the first important steps you need to take as a financially responsible adult is to review your credit report and look for areas where you can improve. In today’s digital world, it’s convenient to obtain a copy of this document online. Check out the CIC website to learn more about credit reports in the Philippines.

This article was created in partnership with the Credit Information Corporation (CIC). Learn more about credit reporting in the Philippines and request for your credit report online. Visit the CIC website to learn more!

Sources:

• ^[1] Republic Act No. 9510 (CIC website)
• ^[2] List of Submitting Entities in Production (CIC website)
• ^[3] Sample Individual Credit Report | Sample Corporate Credit Report (CIC website)

Venus Zoleta

Venus is an experienced personal finance writer with a background in digital marketing, public relations, and journalism. She’s into stock, VUL, and mutual fund investing. Follow Venus on LinkedIn.