i have a friend who moved back to the philippines and they know i have a little bit of knowledge regarding credit cards and wants me to teach them. Are there credit bureaus and such in the Philippines and everything that we have in the US is similar there? I dont want to mislead them LOL. thanks!
I don't know, but I would think lumpia's lumpia, wherever you go, just slightly different depending on your location.
It is not as centralized as here in the US, but they do use some form of credit reporting. It's kind of compartmentalized.
Case 1: Most banks use their own internal credit reporting and scoring.
Case 2: A small group of banks uses an external credit reporting bureau. Transunion Philippines, for example, are being used by only a handful of banks.
You can theoretically burn a bank relationship, and most banks won't even know.
They are still behind when it comes to these things. Cash is still king, and the preference for using a credit card is low, whether it for the buyer or the merchant. Amex is relatively new (surprised they even exist there). My last trip there last April, a lot of merchants (including Starbucks) were amazed that our cards have gone away with the embossed numbers. In fact, you can still find carbon copy slide machines there. It is getting better though, and this information might become irrelevant sooner rather than later.
When it comes to how scoring works, it's mostly similar to how we are scored here in the US. You should be able to help in this regard.
I've moved the thread for better visibility, and with a little luck @RobertEG will come along. I believe he might be able to share additional knowledge on credit matters in that part of the world.
I have been a resident of the Philipinnes for several years.
It is primarily a cash society for all but major loans, such as auto and mortgage loans. Outside of the major cities and scattered large malls, such as SM, Robinsons, and Walter Mart, local stores do not usually accept credit cards. The value of having a credit card really depends upon whether you live in or near a major city or mall, or whether you live out in the provinces.
Credit reporting agencies are in their infancy, are not routinely reported to by creditors and businesses, and thus credit scoring does not provide a solid view of a consumer's credit history. Scoring is rarely if ever used.
I have a Master Card credit card issue through Bank of the Philippines Islands, and their approval was essentially based only on proven income and amount deposited with them, They did not credit check, and I have no available credit score.
Application for major bank cards is normally done via the bank where you have an existing account, such as BDO or BPI.
My primary use of my Master Card is for internet shopping, which is becoming very prevalent in the 'pinnes.
A major difference between shopping in the U,S, and the Philippines is the lack of signficant selection of options when buying major consumer items. Chinese import brands are common, as are locallu made ripoffs of low quality, and if you are seeking "brand name" items, you are more likely to find them thru internet sites similar to Amazon. That is where having a major credit card, such as MasterCard or Visa, is very useful.
Because there is no wide use of credit reporting, even if a CRA is estaqblished, it will not have a database of any statistical significance, and thus any scoring system would not provide a solid risk analysis for lending decisions. As a consequence, default rates on loans are very high, and consumers generally pay the price via much higher interest rates. Interest rates in the 'pinnes generally have a monthly rate that approaches an annual APR rate in the U.S.
No, it is not similar in any significant manner to the U.S. credit reporting and scoring system.
Wow! Thank you so much for all the responses and write ups! I will communicate this to my friend! Thanks for always being so helpful guys!