Filipinos show growing trust in credit

Filipinos are demonstrating increased confidence and willingness to engage with credit products despite ongoing financial uncertainties, according to TransUnion’s 2024 Credit Perception Index (CPI).

The index for the Philippines rose to 69, a four-point increase from last year, indicating enhanced knowledge, trust, and favorability towards credit among the population.

“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.

The report revealed that 70% of Filipinos now possess a general understanding of credit concepts. Installment payments, credit cards, and Buy Now Pay Later (BNPL) services are the most familiar credit products, with knowledge levels at 82%, 76%, and 74%, respectively. Trust in these products has also improved, with installment payments being the most trusted at 80%, followed by credit cards at 76%, and BNPL services at 74%.

However, a significant knowledge gap persists between the unbanked population and others. Only 54% of unbanked Filipinos understand credit, compared to 70% of the general population and 83% of FinTech professionals. This gap has widened from last year, highlighting the need for targeted financial education efforts.

Economic sentiment remains cautious among Filipinos, with 38% estimating their total wealth at PHP 250,000 or below, and 75% considering themselves lower middle class or below. Optimism about financial improvement has declined, with only 84% expecting better financial situations next year, down from 90% in 2023.

Despite these concerns, there is a notable increase in the adoption of credit products. Ownership of credit cards and personal loans has risen to 40% and 25%, respectively, while debit cards, savings accounts, and virtual bank accounts also show significant growth.

“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.

Safety and security concerns remain a top priority for Filipinos using credit products. While fewer people now view credit cards as risky, concerns about scams persist, with 46% of respondents expressing worries about fraud.

TransUnion emphasizes the importance of transparency, security, and a strong institutional reputation to further build trust in credit products. Nearly a quarter of respondents prefer clear terms and conditions, while 19% want enhanced security measures.

The CPI study surveyed 1,000 consumers and 200 FinTech professionals to gauge attitudes and future receptivity towards credit. TransUnion aims to continue monitoring changes in Filipino credit perceptions to foster greater financial inclusion and economic opportunity.