- A lack of credit history can make it harder for first-time borrowers to access formal credit, even when they have the capacity to repay, the Credit Information Corporation (CIC) said.
- During the “Optimizing Alternative Data for Inclusive Credit Access” webinar, the CIC, the country’s public credit registry and repository of credit information, said a person with no prior credit exposure may have no credit data.
- Lenders use credit history to assess borrowers, making a proven repayment record an important part of credit decisions.
A lack of credit history can make it harder for first-time borrowers to access formal credit, even when they have the capacity to repay, the Credit Information Corporation (CIC) said.
During the “Optimizing Alternative Data for Inclusive Credit Access” webinar, the CIC, the country’s public credit registry and repository of credit information, said a person with no prior credit exposure may have no credit data.
Lenders use credit history to assess borrowers, making a proven repayment record an important part of credit decisions.
That creates a challenge for "creditworthy, yet credit-invisible" people trying to enter the formal credit system. They need credit to build a track record, but lenders have less information to assess them without one.
Alternative data could give lenders more information when assessing applicants, particularly when traditional credit records provide little or no history, the CIC added.
The Bangko Sentral ng Pilipinas' Open Finance framework already allows customers to authorize financial institutions and third-party providers to access financial data for services such as enhanced credit decisioning.
As Open Finance develops, wider access to financial data could give lenders more ways to assess first-time applicants beyond traditional credit history, potentially opening more paths into formal credit.