A frustrated loan applicant recently shared her problem: Despite having the means to repay, she still kept getting rejected — a common issue for many Filipinos.
Most Filipinos seeking loans have little or no credit history, making it hard to get credit when needed most. Lenders want to help those needing cash or financing for purchases, but only to those they believe will repay.
A gap exists between lenders and borrowers. Many borrowers don’t know about available credit options. Lenders struggle to find ways to extend credit to underserved groups like gig workers or those without formal income records.
Financial institutions have tried new ways to evaluate creditworthiness beyond calling references or partners. Some use phone data to predict payment behavior. Once Filipinos get their first loan, many repay well. But getting that first loan remains the biggest hurdle.
My 2022 study showed a clear link between Filipinos’ phone usage and loan repayment habits. Phone data can help predict payment behavior, supporting earlier research findings.
Combining this data with artificial intelligence creates an efficient way to assess repayment ability. This should benefit everyone.
So why do lenders still reject applications? Why do many distrust new credit scoring methods despite proof they work?
Many lenders take a cautious approach, watching new technologies while sticking to traditional methods. They slowly adopt innovations while protecting their businesses. This caution helps the economy while managing risks, though they could move faster.
If you cannot get credit, start small. E-wallets and finance apps offer smaller loan amounts to help build credit history. Research to find the right loan for your needs — not all will fit your situation. Specific financing options might be cheaper than general loans. If buying furniture, look for furniture financing; for an e-bike, seek e-bike financing.
Don’t wait for the perfect time. Prepare now for your loan application and plan how to use credit effectively. Credit is just a tool — its value depends on how you use it.
Aian Guanzon is a financial inclusion and fintech advocate.