MANILA - The number of Filipinos classified as high risk for loan default peaked last year due to the disruptions caused by the COVID-19 pandemic, but the situation is seen stabilizing this year, a credit score company said on Monday.
Pia Arellano, president and CEO of TransUnion Philippines said that from around 17 percent in 2019, the percentage of Filipinos deemed “high risk” shot to 23 percent in 2020.
“The good news is we are seeing this stabilizing in 2021,” Arellano said in an interview with ANC Market Edge.
Credit scores are used by banks to determine if borrowers are worth lending to, and what interest rates and terms they are subject to.
Arellano noted that even with record-low interest rates, bank lending which is supposed to stimulate the economy, has barely grown as banks remained reluctant to lend due to worries over clients’ ability to pay.
TransUnion however said better data analysis of loan customers can help nudge banks to lend more by more accurately identifying which borrowers at a higher risk of default, and which are more likely to continue paying their loans.
“We have to address economic paralysis with the power of data analysis,” Arellano said.