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Good Record, Better Deals

A good credit record is very valuable to you as this information is used by banks and finance companies when they are deciding whether to approve your application for a new loan or credit card, or when managing existing such as increasing your borrowing limit.

It takes time to build up a good credit record. You can achieve this by:

  Paying bills on time
  Not filing for bankruptcy
  Not having any court action taken against you for non-payment of debts

These all add to a good credit history. Long years of managing your finances well builds up and if you have a record of good up repayment, a lender is more likely to offer you a credit at lower rates of interest. This is because interest rates are based on how risky you are, and judgment about risk is based on credit history.

Treat your credit record like a precious commodity that's hard to replace once you lose it. You need to protect it carefully as it will affect your chances of getting a loan or credit card application approved when you really need it. Managing your financial affairs well will help you improve your credit record and your ability to achieve your dreams.

Good Credit History

  Easier access to credit, lower interest rates on loans
  Tells employers, banks and anyone who is considering entering into an agreement with you that you are trustworthy

Poor Credit History

  Harder to access credit products, higher interest rates, difficulty getting products like loans
  Suggests to banks that you may not fulfill credit agreements
  May negatively affect your chances for future employment

No Credit History

  No credit history is better than a poor credit history, however it may still be difficult to access credit
  As an alternative, lenders may look at regular payments, history of rent, utility bills, and other large expenses to see how
   you've managed your bills in the past

Your Credit Score

A credit score is a number that indicates the status of your credit record. This number changes, as the information in a credit report changes. For example, if you make late payments on a loan, your score will drop. This score is composed of information about your amount of debt, type of credit, length of credit history, and payment behavior, among others.

The financial service industry uses many different credit scores. These may differ from lender to lender, or from type of credit (credit card, loan, etc.). scores are determined from credit-scoring models developed by these lenders. Part of a lenders approval process is to then compare your score with the scores of people with similar credit profiles.

A score shows a lender how likely you are to make repayments on a loan, and if you can make these payments on time. You will have a better chance of being approved for a loan application if you have a high credit score.

Top tip: The best thing you can do to improve your credit score is to pay bills on time. Paying the minimum payments on time will improve your record more than paying it at all. Missing a payment entirely is the worst thing you can do for your credit record.

This credit guide has been developed by HSBC to ensure the personal financial health of our costumers in the Philippines. The information contained in these pages is not intended to provide professional advice and should not be relied upon in that regard.

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