Young professionals urged to start building credit history

MANILA, Philippines – Young professionals have been urged to start building their credit history as the country prepares to have a fully-operational integrated credit bureau soon.

Credit Information Corp. president Jaime Garchitorena said it is important for the youth to start being conscious of their credit usage to benefit them in the future.

“The earlier you start building your credit score or credit history, the better for you,” Garchitorena said as the CIC plans to launch a credit score database by 2017.

Currently, the CIC is still building a centralized credit information system. Garchitorena earlier said the CIC should have at least five credit bureaus under its wing working on and expanding databases dealing with the credit activities of individuals, groups, and corporations by December.

The CIC plans to draw data from utility firms, telcos, state-pension funds, and other government agencies aside from financial institutions to help create this registry.

Since having a “good” credit history would help individuals take out loans for business ventures, properties, or vehicles in the future, Garchitorena said the public, especially those in their 20s and 30s, should make sure all their credit behavior should be attributed to them.

For one, individuals should get a postpaid line as soon as they can and make that their starting point for building a credit history.

“The only excuse people use to not get a postpaid line is they don’t want to exceed their limit but telcos have responded to this already… so you can easily cut-off at say, the P400 that you can afford to pay,” Garchitorena explained.

Another consideration for young professionals should be the electricity and water bills they are paying especially if they are renting an apartment or a house.

“Chances are, the [electric or water] meters are in the name of the owner… so you’re wasting all that good credit behavior because it’s in the name of somebody else,” Garchitorena stressed.

He also noted parents should also consider transferring the name registered with water and electric companies to their children so the latter could have his or her own credit history.

“Now you have to make sure that all the good credit behavior data that you can gather is now attributed to you,” Garchitorena said.

At present, the CIC has “very limited” information on the credit behavior of individuals and businesses, and none of these data are connected.

However, Garchitorena is confident that the CIC will be able to gather records easily and be able to launch credit scores in 2017 as the agency has already started extracting information from various databases.

The government owns 60 percent of the CIC, while the remaining 40 percent is held by the Bankers Association of the Philippines, Chamber of Thrift Banks, Rural Bankers Association of the Philippines, Philippine Cooperatives Center, and the Credit Card Association of the Philippines.

It was created in 2008 to establish a central system for credit information partly to ease the access of individuals and corporations for loans.