A study by TransUnion, a global information and insights company, showed that Credit Perception Index (CPI) in the Philippines currently stands at 65 out of 100. 

The TransUnion CPI for the Philippines measured how Filipinos perceive credit across various dimensions such as attitudes, knowledge, trust, favorability, and future receptivity.

The study reveals that most Filipinos (69%) have a basic understanding of credit. They are most knowledgeable about credit card installment payments (83%), personal loans (77%), credit cards (71%), and Buy Now Pay Later (69%). However, they are less familiar with mortgages (58%), auto loans (54%), and overdraft protection (25%).

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The TransUnion CPI study was conducted by TRUE Global Intelligence and commissioned by TransUnion. The study comprised 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.

Financial products

Trust in different credit products follows a similar pattern, with credit card installment payments (81%) and personal loans (78%) considered more trustworthy, while overdraft protection (42%) is less trusted. This suggests a connection between knowledge and trust — the more consumers know about a credit product, the more trustworthy they find it.

When compared to other financial products, Filipinos prefer cash (96%) and e-wallets (93%) over Buy Now Pay Later (66%) and credit cards (59%). However, credit card ownership remains low, with only 25% of respondents having a credit card. In contrast, 85% have an e-wallet. This may indicate a conservative attitude toward credit among Filipinos, despite credit cards being widely used in other countries.

The study also highlights the lower knowledge, trust, and favorability of credit among the unbanked population. Their CPI is 53, 12 points lower than the general population. Unbanked individuals have a limited understanding of credit products (27 out of 100) and lower overall trust (39) and favorability (40).

Perception of debt

There is a negative stigma associated with credit in the Philippines, with many perceiving it as debt, overspending, and irresponsibility. Some respondents believe that borrowers will accumulate unmanageable debt (45%) or face imprisonment for non-payment (42%). Despite these perceptions, informal credit sources, such as borrowing from family and friends, are heavily relied upon by 72% of Filipinos and 78% of the unbanked population.

Filipinos primarily acquire credit knowledge from family and friends (67%), followed by banks and financial institutions (61%), and financial advisors (42%). The unbanked population relies on family and friends (69%), as well as Facebook (51%) and YouTube (45%) for financial education.

“To address these challenges, there is a need for collaboration between the public and private sectors to provide more formal and reliable channels for financial education,” TransUnion said. “It is essential to transform the perception of credit from something harmful to a gateway for improved economic opportunities. Responsible credit use empowers consumers to achieve their aspirations and contributes to economic growth on a national scale.”