- Survey of Filipinos shows a correlation between knowledge and trust in credit products, underscoring the importance of boosting financial literacy to bring more people into formal financial systems
- Unbanked Filipinos rate their knowledge of credit significantly lower than the general population
- Many Filipinos are held back by perceived stigma around credit, and most still rely on informal credit rather than formal credit systems, especially among the unbanked population
Filipinos’ Knowledgeability, Trustworthiness and Favorability in Credit Products
Unbanked Filipinos find themselves less knowledgeable and have less trust in credit The study also takes a deeper look at the credit knowledge and perceptions of the Philippines’ unbanked population. The CPI of the unbanked population is at 53, 12 points lower than that of the general population. The biggest gaps between the unbanked segment and the population as a whole are related to credit knowledge, as well as trust and favorability. Among the unbanked respondents, 58% said they understand the general concept of credit. However, on the knowledge of different credit products, the unbanked population scores themselves at 27 out of 100, significantly lower than the general population’s 54. The unbanked population also scores 39 (19 points lower) and 40 (14 points lower) out of 100 on overall trust and favorability, respectively. Negative Stigma Surrounding Credit Remains Additional findings show that the notion of credit, or utang in Tagalog, is often associated with debt, overspend and irresponsibility among consumers in the Philippines. In fact, many among those surveyed believe people acquiring credit products tend to overspend (57%), or are already in debt (50%). Many also believe that these borrowers will eventually acquire unmanageable amounts of debt (45%) or will go to jail if they do not pay their debts (42%). Despite these perceptions, there is still a high level of reliance on informal credit rather than on formal credit systems. Nearly three quarters of Filipinos (72%) turn to family and friends to borrow money, and the percentage goes even higher to reach 78% among the unbanked population. Filipinos’ longstanding stigmas and perceptions of credit may be due in part to the sources of their credit knowledge. Most Filipinos learn about credit products from their family and friends (67%), followed by banks and financial institutions (61%) and financial advisors (42%). When looking at the unbanked population, apart from family and friends (69%), they rely mostly on Facebook (51%) and YouTube (45%) for financial education. “There is an enormous opportunity for the public and private sectors to work together to provide more formal and reliable channels for the Filipino public to acquire financial knowledge, and thus transform the conversations of credit seen as mere harm into a gateway to improved economic opportunities. It is not simply about understanding personal finances and credit, but more importantly, leveraging the power to access opportunities made possible by more informed financial decisions and responsible lending. Responsible credit use empowers consumers to realize their aspirations, whether that be starting a business, pursuing further education, or building a home. On a national scale, it also serves as a catalyst for economic growth, as proven by a great many economies around the world,” concluded Arellano. About the TransUnion Credit Perception Index The TransUnion Credit Perception Index (CPI) study was conducted by TRUE Global Intelligence and commissioned by TransUnion. The study comprised of a survey targeting 1,100 consumers of the general population, as well as an oversample of 200 consumers of the unbanked population and an oversample of 200 small business owners between January and February 2023. To gauge Filipinos’ current attitudes and future receptivity towards credit, respondents were posed a series of questions to rate their knowledge, trust and favorability surrounding credit and other financial products. The study aims to provide a holistic view of credit perceptions across the landscape, and gain further insights to address gaps surrounding public perceptions of credit, what may influence them, and what may shift their perceptions. The study is intended to be a recurring effort to observe changes in prevailing credit perceptions in the Philippines over time. For more information and insights, please view the full report of the TransUnion Credit Perception Index study. About TransUnion (NYSE: TRU) TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good®. TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries. In the Philippines, we were the first comprehensive private credit reference agency (CRA) and we have helped Filipinos to better understand and manage their personal finances for more than a decade. We serve a range of clients across multiple sectors, including international, national and rural financial services providers, telecommunications, utilities, FinTech and retail organizations. transunion.ph
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