How to repair your bad credit record


Posted at Aug 05 2014 03:33 PM | Updated as of Aug 06 2014 05:48 PM

MANILA, Philippines – A certification of full payment from all creditors is necessary to repair a bad credit record.

Credit Card Association of the Philippines executive director Alex Ilagan said this is the only way to fix your credit record today in the absence of a central credit database.

Ilagan said that because most credit card holders are still careless about due dates and payment history, more education is needed to remind them to take care of credit history and profile because it’s going to affect borrowing plans in the future.

“Most people would really not understand that if they default on something today, that could affect their ability to borrow money in the future, that’s not very clear right now. That’s why there has to be a lot of education that has to be done,” he said on ANC’s “On The Money.”

From Salve Duplito's Facebook page

Financial adviser Salve Duplito, meanwhile, said that because there is no central database to monitor credit, consumers themselves should take the initiative to gather their own records.

“Going back to each company, requesting for certification, calling everyday to follow up is not something that any consumer would jump up to do. But anybody who defaulted in credit payment in the past should have this on his to-do list today,” said Duplito.

She said the absence of a unified database also makes lending very risky and limits the market of lenders.

From Salve Duplito's Facebook page

Ilagan said that once a unified database is set up, it may bring down interest.

“The cost of credit is actually reflective of the amount of risk that banks will have to take on. The risk is there because there is a lot of unknown about the borrower, hopefully that’s what will be eliminated,” he said.

Jaime Garchitorena, president and chief executive of the Credit Information Corporation, said this will also help borrowers looking to tap other banks in ASEAN countries.

He added that a credit database will also be helpful because it can also indicate positive data, which will help improve a borrower’s credit profile.

“In the universe of data, the more data the better, and when we talk about bringing down the cost of borrowing or assessing an individual for risk then that’s where we start bringing in utility payments or any other type of positive and or negative data that may exist out there,” he said.