Denied Loan? Unlock the Mystery of Your Credit Score!

May 3

2 min read

We've all been there. You've got your eyes on a personal loan—maybe for that dream getaway, some much-needed home fixes, or some emergencies. You diligently submit your paperwork, filled with hope... only to receive that disappointing "Loan not approved" message.

Ang sakit, ‘di ba? 😞

But don't lose heart! Often, the reason behind this setback lies in something many Filipinos might not be fully aware of: their credit score.

Decoding Your Credit Score: Why It's Your Personal Loan Passport

Think of a credit score as a numerical snapshot of your financial responsibility. It tells banks and other lenders how likely you are to pay back any money they lend you. If you've ever owned a credit card, taken out a loan, or paid for items in installments, you've already started building a credit history. And it's this very history that lenders examine closely when you apply for a personal loan.

Why That "Not Approved" Might Be Credit-Related

Here are some common credit-related reasons why your personal loan application might have been declined:

Oops! Late Payments in the Past: Regularly missing payment deadlines on previous debts can hurt your score.
Uh Oh, Maxed Out Cards: Using up your entire credit limit can signal financial overextension.
Whoa There, Too Many Loans Too Soon: Applying for several loans in a short timeframe can raise concerns for lenders.
Hmm, Not Much History There: If you haven't borrowed much before, lenders have limited information to assess your reliability.

Essentially, lenders are looking for trustworthy borrowers. If your credit history shows a pattern of payment issues, they might hesitate to approve your loan.

Understanding Good Credit Score Ranges

In the Philippines, credit scores typically range from 300 to 850. Here's a general guide:

300–649: Risky Zone – Loan denial is very likely.
650–699: Proceed with Caution – Approval might be possible, but expect higher interest.
700–759: Looking Good! – You have a good chance of loan approval.
760–850: Excellent Territory! – Expect favorable loan terms and interest rates.

Remember: A higher score opens doors to better loan opportunities!

Curious About Your Score? Checking is Simple!

Stop wondering! You can easily check your credit score through the Credit Information Corp (CIC) - the government's credit data authority, or recognized credit reporting agencies like CIBI, TransUnion, and CRIF. Knowing your score empowers you to understand your loan eligibility and take steps to improve it if needed.

Simple Steps to Level Up Your Credit Score Before Applying

Here's how to get your credit score in better shape:

Always Pay on Time: Set reminders or automate payments to ensure you never miss a due date.
Keep Your Credit Usage Low: Try to use only a small portion (ideally under 30%) of your credit card limits and installment plans.
Be Mindful of Loan Applications: Applying for too many loans at once can negatively impact your score.
Build Credit Gradually: Even consistent payments on smaller bills can help establish a positive credit history.

Taking Care of Your Credit for Future Loans

A personal loan can be a fantastic resource when you need it, but lenders need to feel confident in your ability to repay. Your credit score is the foundation of that trust. So, if a personal loan is in your future—whether for travel, home improvements, or unexpected events—take the time to understand and nurture your credit score. Because the next time you apply, you deserve to hear that wonderful word: "Approved!" ✅💸