For the past several years, there has been talk in the Philippines about a credit reporting system. I had never really heard of anything coming from the talk, although I heard a few years ago the law was passed about this. Still nothing concrete though.
The other day though, I got an email from Globe Telecom. I will include a copy of that email in this article. Based on that email, it would appear that action has already been ongoing, and is moving forward at a rapid pace.
For me, I see both good and bad in this. For me personally, I don’t really see any bad, only good things. For others though, this could be bad news. I do know that a lot of ex-pats come here to the Philippines leaving behind a lot of debt in their home country. Now, I have no idea whether this credit bureau that’s being set up here would do any reporting to other countries or not, but if that were to be could pose a problem for a lot of ex-pats. I did not leave any debt behind in the United States, so it’s not really a concern to me.
The good
Getting credit here in the Philippines has always been difficult, especially for ex-pats. For example, if you wanted to borrow money to build a house, buy a car, or whatever it can be difficult because we really have no credit history here. On the other hand, if you’re buying something that could be used as collateral, such as a house, that can be worked out because there’s something in place at the bank and take if you don’t pay. Still though, with no credit reporting here, even if you get a bank to loan you money for a house, or something else, when you make all the payments you don’t get a credit towards that to give you a good credit record.
If credit reporting agencies like we have in the United States were set up, anytime you were to make a loan, pay ongoing bills, and such, this would all be recorded and help build a history of your worthiness to receive credit. Personally, I see that is a good thing. Given the fact that many people move here leaving debt behind, I can see where they would be worried about this.
Based on the email that I received from Globe, it sounds like this credit reporting has been going on for several years already, but that telecom companies are just now being included this year, and Globe has every intention to cooperate. For me, where paying the bills every month anyway, so why not get some kind of credit for our on-time payments that we make every month. If paying everything on time would mean that it would make things easier as far as applying for credit, I consider it a good thing.
Here is a copy of the email that I received from Globe Telecom:
Dear valued customer,
We place great importance on keeping you updated on anything that would matter to you as our customer. That’s why even right at the beginning of your journey with us, we find it essential to share with you the recent mandate in which the government has asked us to strictly comply.
The Credit Information Corp. (CIC) has directed Globe to adhere to the Republic Act 9510 or the Credit Information Systems Act (CISA) of 2008, which mandates various organizations, including banks and credit card companies, to submit their customers’ basic credit data to the CIC. The CIC is a government-controlled agency responsible for establishing a credible and centralized credit information system in the country.
This year, telecommunication companies have been included in the list of organizations required to submit this information. In line with this, Globe has started providing required credit information needed by the CIC to comply with RA 9510 in June 2017. The government is requiring Globe to send your account/s’ basic credit data and updates on a regular basis to the CIC. This includes your contact details and updates on your account, including any outstanding and overdue balance.
Rest assured that your call, text and data usage information will remain private. CIC will also not share your credit information with other credit institutions without your authorization. Participating credit institutions will be able to get your credit information from CIC upon your approval when you apply for a loan, insurance or a postpaid account. With this, we highly recommend that your Globe payments are kept updated as this could influence your creditworthiness.
We value your awareness on these matters. To learn more about the CIC and this mandate, kindly visit www.creditinfo.gov.ph.
Thank you, and have a wonderful day!
Sincerely,
GLOBE TELECOM
Share your Thoughts
So, what do you think about this? In my personal situation, I don’t really see any downsides. For others, I can understand that it may be different. I would be interested in hearing your thoughts.
Hi Bob. I hope the Philippines does a better job of protecting their credit data than Equifax. As for me, I no longer care about credit scores. At this point in my life, if I can’t pay cash then I shouldn’t be buying it. Actually, that’s not bad advice at any age. Still, it’s good to know that data in the Philippines is being collected. Thanks.
Hi Steve – I am like you. I have gotten used to paying cash for everything since living in the Philippines, about 18 years now. But, there are times when we would like to purchase something on credit, rarely. Overall, if operated properly, I consider this a good thing.
Bob, As a retired credit and collections specialist, I have a particular interest in this topic. I’m pretty certain that credit bureaus at least at the consumer level don’t talk to each other across national borders.
No, if I implied that in any way, that was not my intention. This is a Philippine thing. Has nothing to do with any other country. An internal credit reporting system, which has been non-existent here until now.
I worked at a USA credit card company for many years. I don’t ever recall handling data from a foreign entity or sending it to a foreign entity. Of course, foreign banks do partner with U.S. banks so that credit cards are accepted internationally. I think the risk is entirely on the bank/country issuing the credit card based on their internal risk assessment. (I’ve been away from the business for 4 years.)
Yes, it would be my expectation that the credit card provider would the the one at risk in the event of non-payment.
Like you, I see this as a good thing, if my telco accounts and activities can form the basis of a credit history then great. I have to confess that I am not planning on asking for a bank loan or mortgage any time soon, but my wife might
I agree Gary. Even if you don’t plan to get a loan it is good to have the option available.
Aloha Bob. Your post and the other comments are from a micro point of view. And there is good common sense in all the issues in all the comments. I have discussed this issue of the credit reporting system and a credit score with many who have worked in the Philippines in a capacity dealing with business and economics. There is nothing but agreement amongst all of us. A national economy takes a hit when debts are not paid consistently over time. Entities that loan money all increase their interest rates due to unpaid loans. All their underwriting efforts, without a credit reporting system, will improve with a system. Knowing if a potential borrower has a history of paying back past loans using credit reporting system will benefit all. Including those who initially are determined to have bad credit. It does not take a doctorate to take the steps to turn around bad credit history. Those that do will benefit by a more sound financial future.
Yep. This should be a major step forward for Philippine business.
Sounds good.
In the early part of my life I got married, she proceeded to put me in the dumper with credit. I got shud of that problem and was single for the next 35 years. I paid cash for everything or did without it. I’ve owned Condos, houses motorcycles and cars all without credit. I have one high dollar Visa card, that I pay off the day I use it, but I found years ago that I couldn’t rent a car in the United States without it. I got the card at the Navy Federal Credit Union as I am a credit ghost with the rest of the world..My credit rating:, they don’t even have my name on file. Cash will always be king!.
I agree with you and I live my life with Cash, not Credit. However, as I recall, your grandson’s name is Jayden, right? Hopefully I remember that correctly. What if he got sick and the only way you could save his life is by borrowing money against that one credit card? I am sure you would not hesitate. It is always good to have the option.
Bob;
Oh yes I would, but I have a lot in savings and the Credit Card that I would go through like grain through a goose and never miss it. Bu he is well insured in the sates, so that won’t happen, once again—-Yes I would in a heartbeat!
Hi Bob,
I use a credit card for many purchases in the USA and when I visit the Philippines I use the same credit cards at the malls and grocery stores. I use to always pay the entire bill when I got it in the mail. I now actually round up and pay a little more than the bill. Before visiting I pay an extra $1,000 so that when the bill arrives in the USA which I don’t get when I am in the Philippines I don’t owe any money. So I am not required to write the bank a check until the next statement. I feel it is safer to pay with a credit card than to let people know I am carrying loads of cash which I never do.
Peace
Jay
As an Economist I see this move making a huge impact on developing a capital market and thereby speeding up economic growth. Lots of new business opportunities are there in the Philippines that have in the past not been able to get off the ground due to lack of capital sources.
Expats with bad credit in the USA should not worry. There is no cross border credit reporting.