Global information and insights company and the Philippines’ first comprehensive private credit reference agency, TransUnion, released its second annual Credit Perception Index(CPI) which examines Filipino perceptions towards credit, factors contributing to those perceptions, and broader implications for the nation as a whole.
The study aims to inspire meaningful dialogues and actions to improve credit literacy and financial inclusion at large for the Philippines.
The TransUnion CPI for the Philippines currently stands at 69 — an increase of four points from last year. The increase reflects improved concept knowledge, product knowledge, trust and favorability in credit products among Filipinos.
“The improved 2024 CPI score of the Filipino population is a product of collective efforts to foster greater financial literacy and inclusion. Despite financial uncertainties, we are delighted to see Filipinos proactively seeking ways to better manage their finances and unlock economic opportunities through responsible credit use,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.
This year’s study finds that most Filipinos have a general understanding of the concept of credit. Across credit products, Filipinos are most knowledgeable in installment payments (82 percent), followed by credit cards (76 percent), and buy now pay later (BNPL) services (74 percent). A five percentage points increase in knowledge is observed in both credit cards and BNPL.
These two products also recorded a jump of six and three percentage points from last year in terms of trustworthiness — standing at 76 percent and 74 percent respectively, after only installment payments (80 percent). Moreover, BNPL (74 percent) and credit cards (72 percent) are growing in favor among the general population too, rising five and nine percentage points from 2023.
“Upward trends in credit knowledge, product preferences, consumer trust as well as favorability provide huge opportunities for lenders. As consumers are growing more aware and receptive towards credit products and usage, the formal financial sector must undertake trust-building efforts to continue to shift perception towards credit as an empowering force in the lives of Filipinos,” said Yogesh Daware, Chief Commercial Officer at TransUnion Philippines.
“By doing so, further financial inclusion can be made possible in the country and driving overall national development.”
Despite these improvements, knowledge gaps still exist between the unbanked population and other populations.
Currently, only 54 percent of unbanked Filipinos are knowledgeable about credit — a 16 percentage point deficit compared to the general population, and a 29 percentage point gap versus professionals from the financial technology (FinTech) sector. This represents a widening of the knowledge divide, as the disparity between the general and unbanked population was at a smaller 11percentage points last year.
Financial sentiment among Filipinos appears to be less optimistic this year. Close to two fifths (38 percent) of the general population estimate their total wealth to be at P250,000 and below. Moreover, the majority of surveyed Filipinos also consider themselves to be at best lower middle class or below.
Fewer Filipinos are optimistic that their financial situations will improve in the next year (84 percent) — dropping six percentage points from 2023. The study also reflects decreases in the number of Filipinos who expect their household income to increase next year (74 percent) and among those who can easily afford their daily necessities (68 percent), representing declines of nine and four percentage points respectively.
