MANILA: The 2024 Credit Perception Index (CPI) for the Philippines improved by four points, showing improved willingness to embrace credit, private credit reference agency TransUnion said.
“Credit Perception Index (CPI) assessed Filipinos’ current attitudes and future openness to credit, examining their knowledge, trust and favorability toward credit and other financial products,” TransUnion Asia Pacific principal of research and consulting Weihan Sun said in a virtual briefing on Friday.
The TransUnion Credit Perception Index (CPI) study is comprised of a survey targeting 1,000 consumers of the general population, as well as an oversample of 200 FinTech professionals between March to April 2024.
TransUnion’s second CPI study showed that the Philippines’ CPI currently stands at 69, up by four points from last year, reflecting an improved concept knowledge, product knowledge, trust and favorability in credit products among Filipinos.
“Now there’s a lot of things that contributed to this. So one of the impo
rtant things, especially in a developing market, is when consumers gain additional access or more access into the credit market, their perception of credit automatically improves because previously, you know, if a consumer goes to a traditional lender and they apply for a loan and they’re declined, their perception is very sour and very negative, because they feel very excluded,” he said.
“So as the government, as well as the banking and financial services sector in large continues to promote inclusion, we’re likely to see this perception index improve,” he added.
Sun, however, said the CPI of the unbanked was at 39, lower by 14 points than 2023, reflecting a further deterioration of credit perception and knowledge.
Sun said if the government achieves its goal to transform the Philippines into an upper-middle income country, the number of unbanked population will decline.
For FinTech professionals, the CPI was at 91, higher by 22 points than the general population which shows that they are more in favor o
f credit and understand it better than the most Filipinos.
TransUnion’s study showed that 70 percent of 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).
BNPL at 74 percent and credit cards at 72 percent are also growing in favor among the general population, rising five and nine percentage points from 2023.
The study, however, found that 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 sector.
Results of the study also revealed that fewer Filipinos are optimistic that their financial situations will improve in the next year, with the unbaked struggling the most with the current situation.
Despite these uncertainties, TransUnion noticed a sh
ift toward diversifying financial tools with significant increases in owning credit-based products and bank accounts.
Both credit cards (40 percent) and personal loans (25 percent) showed increases of 15 and 4 percentage points from last year, while debit cards (52 percent), savings accounts (75 percent), and virtual bank accounts (29 percent) reflect increases of 12, 11, and 9 percentage points, respectively.
‘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,’ Sun said.
‘However, disparities in credit knowledge still exist. Continued efforts are needed to further expand access and services to unbanked Filipinos, enabling them to realize the benefits of being financially included,’ he added.
Source: Philippines News Agency