A housing loan is a financing facility that provides funds for the following:

 Acquisition of a fully developed lot

 Purchase of a residential house and lot, townhouse, or condominium unit
 Construction or completion of a residential unit on a lot you already own
 Home improvement or renovation of existing residential property
 Refinancing of an existing housing loan
Some of the aspects of a housing loan you should know about are:

 Monthly payment. You should have a monthly income that is at least three times more than your
monthly payment.
 Down payment. This is the amount you pay upfront when purchasing a home.
 Loan tenure. The total interest paid is directly proportional to the loan tenure. The higher the
tenure, the higher the total interest paid, and vice-versa.
 Type of interest rate. You can choose between fixed-rate and variable-rate terms. The former is a
good option for those who prefer consistent monthly payments. The latter has interest rates that
vary as market interest rates change.

Purposes of a Housing Loan

Home purchase
Banks, real estate developers, and government agencies in the Philippines provide this basic type of loan
to people looking to buy a house and lot, lot only, or a condo.

Home construction
You can get a home construction loan if you already own a lot and want to build a house on it. This loan
type is used to fund construction expenses such as building materials, permits, and labor.

Home improvement
If you are a homeowner needing money for renovation, remodeling, or repair, you can get this type of loan.
This loan can also fund expenses for extending a part of your house or building additional rooms.

Home equity
You can borrow money against your property’s value with a home equity loan. The funds can be used for
other major expenses such as tuition, travel, business, investment, and more.

Loan refinancing
Home loan refinancing is the process of paying off an existing mortgage by replacing it with a new loan
from a different lender. Ideally, the new home loan has a lower interest rate and better terms than the first
one.

Several ways you can reduce your mortgage payments through refinancing your home loan.

1. Get a Lower Interest Rate

If home loan rates have declined since you got your loan, now is the perfect time to take advantage of a
lower interest rate.
Currently, interest rates are at an all-time low. The Bangko Sentral ng Pilipinas (BSP) has cut the key
interest rate to 2.25%[1]—the lowest policy rate in Philippine history—to minimize the impact of the
pandemic on the economy.
If the BSP policy rate is low, expect mortgage rates to fall as well. For borrowers, this means more options
in the market for home loans with low interest rates.
Home loan refinancing is ideal if it allows you to reduce your interest rate by at least 1% to 2%. This will
help you pay less interest throughout your loan term. Your savings will be bigger if your loan has a long
repayment period (i.e., 20 to 30 years).

2. Change to a Fixed-Rate Mortgage

If your current home loan has an adjustable or variable rate, your monthly amortization can go up or down
as interest rates rise or fall due to changing market conditions.
Through home loan refinancing, you can switch from variable to fixed interest rate. With a fixed home loan
refinance rate, you can be sure that your monthly payments will stay the same—and within your budget—
regardless of what’s happening in the market.
3. Reduce Your Monthly Payments
A lower interest rate on a refinanced home loan can reduce your monthly mortgage payments as well. This
is the case whether the new loan term is the same or longer than the first loan.

4. Shorten Your Repayment Term

If your financial goal is to pay off your home loan sooner, mortgage refinancing allows you to reduce the
length of your loan repayment (e.g., from 30 years to 15 or 20 years) with a lower interest rate.

5. Consolidate High-Interest Loans into a Low-Interest Home Loan

Home loan refinancing lets you consolidate multiple high-interest debts (including personal loans, car loans,
credit cards, etc.) into one mortgage with a lower interest rate.
Practically speaking, repaying just one home loan is easier to track and manage than having multiple loans.

Two types of housing loans—conventional and flexible.

Conventional
With a conventional housing loan, you are expected to make fixed payments over a particular period of
time.
Flexible
Banks usually offer this type of home loan. You can control the interest rate of your flexible home loan,
depending on how much you will deposit. You can also start principal repayment anytime.

Three housing loan options you can choose from, based on financing schemes. These are:

1. Bank financing
You have a lot of home financing options, such as the Pag-IBIG housing loan and in-house financing. But
one can’t deny that bank financing has some edge over them.
The Pag-IBIG Fund may offer lower interest rates, but you may find yourself waiting for weeks before you
receive the result of your application. Meanwhile, some banks’ housing loan approval time can be as fast
as five banking days.[1]
Generally, banks have much lower home loan rates compared to in-house financing. Their loan terms are
much more flexible, too. Some banks offer amortizations payable for up to 20 years.
Bank’s housing loans can also be used for other purposes, such as residential lot purchase, new home
construction, or renovation of an existing property. This is not the case with an in-house loan from a
property developer. You can’t apply for in-house financing if you’re not going to buy the developer’s pre-
selling property.

Tips that will help increase the chances of getting approved for a housing loan.

1. Check the Bank’s Minimum Qualifications

Usually, banks require applicants to be at least 21 years old at the time of their application. Likewise, they
shouldn’t be older than 65 years old upon loan maturity.

Banks require applicants to be Filipino citizens. But many still accept foreign applicants as long as they
have a permanent visa or their spouse is a Filipino.

Applicants should also meet the bank’s gross monthly family income requirement, which is usually PHP
25,000 and above. If you’re an OFW, you may be required to have a two-year employment contract.

2. Be Realistic: Go for a Property You Can Actually Afford

Decide on a specific price tag, and let your options revolve around it.

3. Ensure Enough Balance in Your Savings Account

Remember, though, that you’re covering not only the down payment. You’ll also have to factor in the
property appraisal fees, credit report fees, real estate agent fees, and documentation fees. A savings
account with enough money will help you pay for those costs.

4. Maintain a Steady Source of Income

Resigning in the middle of your home loan application may not be a wise decision, as it will give the bank
the impression that you’ve just lost a source of livelihood, which is obviously necessary for repaying the
loan.
Similarly, leaving your job to become self-employed may hurt your chances—unless you can prove that
your business has been profitable (Remember that banks require self-employed applicants to submit their
statements of accounts).

5. Fix Your Credit Score

Before you submit your home loan application, make sure that you have a good credit score.

To clean up your credit history, settle all your financial obligations, from credit card balances to unpaid
loans.

6. Have All the Required Documents Updated

All the documents that you’ll submit to them should be up-to-date, accurate, and consistent with each other.

7. Consider Mortgage Brokering

Mortgage brokers are professionals who give home buyers sound financial advice. They also make home
acquisition much simpler by helping you prepare the paperwork and eliminating the need for you to talk to
different banks.

One of the best benefits of enlisting the help of a mortgage broker is that it can match you up with a bank
that offers good deals on home loans. Its partnerships with banks can provide you a lot of home loan
options.

8. Get Pre-Qualified for a Bank Home Loan

Mortgage pre-qualification is a process that gives you an idea of how much loan and which bank you’ll
likely qualify for. In turn, this will help you decide which property to buy based on the predetermined loan
amount.

At this point, you’ll be asked to provide details about your income, employment history, and the property
you’re going to buy, among others.

Once you’re pre-qualified, you have a better chance of getting a housing loan approval since the
predetermined loan amount has been deemed to suit your financial capacity.

9. Keep Your Communication Lines Open

You have submitted all your requirements. Your credit records are good. On top of that, you have a stable
job. All you’re waiting for is the result.

Keep your lines open and do your best not to miss any update from the bank. Answer every phone call
from the bank’s representative, as any delay in your response may affect your housing loan approval time.

2. In-house financing
You can get a housing loan directly from real estate developers. However, this loan option has a shorter
tenure of only up to five years.
If you opt for in-house financing, you take out a loan from the property developer to acquire the home or
condo you want. It’s less complicated overall versus getting a bank loan.

 Interest Rates and Repayment Terms

The interest rates for in-house financing are generally higher compared to banks. Typically, these interest
rates are fixed and given at a range between 14% to 18%. 

Unlike in banks, the interest rates for in-house financing are not affected by economic factors, which can be
advantageous. However, they have shorter payment plans, typically expecting you to complete the
payment within five years. 

 Requirements
Compared to a bank loan, in-house financing does not require extensive paperwork that you need to
submit. Typically, if you opt for this loan, you will only need to offer a certification of employment or
something that proves your primary source of income. Due to the less complicated processes, your
application also has a lower risk of being rejected. 
According to financial advisors, the best time to take advantage of in-house financing is during the pre-
selling stage of the real estate property. This is because developers usually price these properties around
30% less than a completed unit. 

3. Pag-IBIG housing loan

If you are a Pag-IBIG member, you can get a housing loan from this government agency. This is open for
salaried, self-employed, and OFWs up to the age of 65 years old. It also lets you borrow up to PHP 6
million for a residential lot, house, or condominium.

What is the Pag-IBIG Housing Loan?

Established in 1978, the Home Development Mutual Fund or the Pag-IBIG Housing Fund [1], is a
government-owned agency under the Human Settlements and Urban Development department. It
manages the national savings program and offers affordable house financing for Filipinos.

Below are the two housing loan programs offered by Pag-IBIG:

End-User Financing Program

This is the Pag-IBIG Fund’s regular housing loan program. Under this program, Filipinos can borrow up to
PHP 6 million for a housing loan. You can also get multiple loans and apply with a co-borrower.

Affordable Housing Program

The Affordable Housing Program, on the other hand, caters to low and minimum wage earners. With this
loan, you can borrow up to PHP 750,000 with a repayment period of up to 30 years.

Apart from buying your dream house, you can get a Pag-IBIG housing loan for the following purposes:

 Purchase a residential house and lot, condo unit, or townhouse

 Buy a fully developed residential lot or adjoining lots of not more than 1,000 square meters
 Home improvement or alteration of an existing unit which will improve the house’s durability and
value
 Construction or completion of a residential unit
 Refinance an existing mortgage with an institution acceptable to the Pag-IBIG Fund
 And to combine loan purposes, limited to:
– Purchasing a fully developed lot of up to 1,000 square meters and building of a residential unit
thereon
– Purchasing an old or new residential unit with home improvement
– Refinancing an existing home loan with home improvement
– Refinancing an existing mortgage, particularly a lot loan, with the construction of a residential unit
thereon

To be eligible for a Pag-IBIG housing loan, you should have the following:

 Remittance of monthly contributions for 24 months under Pag-IBIG I, Pag-IBIG II, or Pag-IBIG
Overseas Program. If you have less than the required number of contributions, you can make a
lump sum payment as long as you have been a contributing member for at least a year
 You are not more than 65 years old by the time of loan application
 You are not more than 70 years at loan maturity
 Passed satisfactory checks Pag-IBIG
 Has no outstanding Pag-IBIG loan in arrears
 Had no foreclosed, canceled, or bought back Pag-IBIG Housing Loan due to default or was
subjected to dacion en pago[2]. This includes cases where a borrower no longer wants to process
the loan ultimately surrendering the property.

Pag-IBIG Housing Loan Requirements for Application

  Completed Housing Loan Application (HLA) form[3]
 Recent ID photo of borrower and co-borrower, if applicable
 Proof of income
 One valid ID of primary borrower and spouse or and co-borrower and spouse, if applicable
 Photocopy of Birth Certificate, if single
 Photocopy of Marriage Certificate, if married
 Certified true copy of Transfer Certificate Title
 Transfer Certificate of the land and certified true copy of the Condominium Certificate of Title (for
condo units)
 Tax declaration and updated real estate tax receipt
 Contract-to-Sell or a similar agreement between the buyer and seller
 Sketch of the property or vicinity map
 Health statement for borrowers over 60 years old and members availing of PHP 2 million to PHP 6
million housing loans

Pag-IBIG Housing Loan Interest Rates and Term Periods

The interest rate for Pag-IBIG’s regular housing loan is 5.375% per annum under a one-year repricing
period and 6.375% for a three-year repricing period. Currently, the Fund is offering a special rate of
4.985% for a one-year repricing period and 5.375% under a three-year repricing period. However, these
special rates are only offered until December 31, 2020.

For the Affordable Housing Program, the interest rate is at 3% per annum. This program is offered to low
and minimum wage earners.
The maximum loan repayment term offered by Pag-IBIG is 30 years. However, you should not be more
than 70 years old by the time of loan maturity.

Steps to follow when applying for a Pag-IBIG Housing Loan:

1. Complete the requirements

2. Submit your HLA and pay the processing fee

Once you’ve gathered all the requirements, fill out your HLA and submit it to the nearest Pag-IBIG Fund
office. You can also file your housing loan application online, via Virtual Pag-IBIG. Pay the PHP 1,000
processing fee upon submitting your requirements.

3. Wait for the Notice of Approval (NOA)

Your NOA will be given only to you. If you’re an OFW borrower, it can be released to your attorney-in-fact.
You have 90 days to sign your loan documents once you receive your NOA. If your application is rejected,
you will get a Notice of Disapproval instead.

4. Submit your NOA requirements

Before Pag-IBIG releases your check, you need to accomplish the following NOA requirements:

 Pay for capital gains tax and documentary stamps at the Bureau of Internal Revenue (BIR)
 Pay for transfer tax and transfer of tax declaration at the local government unit
 Go to the Registry of Deeds for transfer of the title and annotation of mortgage

You have 90 calendar days to accomplish these steps.

5. Get your loan proceeds

You can receive your loan proceeds at the Pag-IBIG fund. Bring at least two valid IDS and present the
following documents:

 Transfer Certificate of Title or Condominium Certificate of Title in your name with mortgage
annotation
 Updated tax declaration and tax real estate receipt in your name
 Occupancy permit
 Assignment of loan proceeds
 12 post-dated checks if you will not be paying your Pag-IBIG Housing Loan through salary
deduction
The Pag-IBIG housing loan approval time is within 17 days from the date you complete and submit all
requirements.

Rundown of the Pag-IBIG Housing Loan’s processing time:

 2 business days – endorsement of submitted documents for credit investigation and property
appraisal
 3 business days – reviewing of the result of credit investigation and property appraisal
 8 business days – approval of housing loan application
 1 business day – receiving of housing loan application and release of Notice of Approval (NOA)
 3 business days – preparation of Request for Payment (RFP) up to check availability and release

As for the loan proceeds, you can claim it three days after complying with the Pag-IBIG fund’s post-
approval process.

How to Pay for Your Pag-IBIG Housing Loan

 Salary deduction through Employer Collect Servicing Agreement (CSA)

 Post-dated checks
 Auto debit arrangement with banks
 Payment to an accredited Developer with CSA with the Fund
 Accredited local and overseas collection partners

Tips to increase your chance of loan approval:

1. Settle overdue Pag-IBIG loan payments

2. Have a stable source of income

You should have a steady stream of income for at least two years before applying for this loan.

3. Be realistic
Assess your finances to figure out how much you can realistically shell out for your monthly mortgage
payment. It shouldn’t exceed 30% of your gross monthly income. For example, if your gross pay is PHP
45,000 a month, your monthly home loan payment shouldn’t be more than PHP 13,500.

4. Get all your documents in order

Use the Pag-IBIG checklist to ensure you have all that you need for the housing loan application.

Take care of your credit score

Pay off your credit card and other loan debts since Pag-IBIG does credit investigation. If you have
any delinquency in your credit history, you’re less likely to get approved for a Pag-IBIG Housing Loan, or
any loan for that matter.

5. Apply with a co-borrower

If you have an unstable source of income or it isn’t enough to qualify for a Pag-IBIG Housing Loan,
consider applying with a co-borrower. However, they must have a stable source of income and a spotless
credit history to improve your chance of getting your loan approved.

Pag-IBIG allows two or three members, including the primary borrower, who are up to second-degree
relatives to apply for a housing loan. However, this only applies to the End-User Financing Program.

Here are the general eligibility criteria you must follow to qualify for a housing loan application:

 Must be between 21 to 65 years old upon loan maturity

 Must be a Philippine resident
 If an OFW, special power of attorney must be provided as well as contract or certificate of
employment (COE) approved by the Philippine Overseas Employment Administration (POEA)
 If you are a foreigner, you must meet VISA requirements and submit your Alien Certificate of
Registration.
Joint Housing Loan
If you are married, you and your spouse can apply for a housing loan together. Your lender will evaluate
both of you, according to your combined gross family income.
But, if you are single, you can still apply for a joint housing loan with a co-borrower. Your co-borrower will
be equally responsible for repaying the loan.

When you apply for a housing loan in the Philippines, your lender will evaluate your application and
ability to pay off the amount you wish to borrow based on the following:

Income
How much you earn plays a huge part in getting a home loan. Banks are more inclined to look into your
credit standing and income stability before granting your loan request. Pag-IBIG, on the other hand,
considers your contribution and net disposable income.

Age
Your lender will base the maximum length of term for your housing loan on your age. For example, if you’re
already 45 years old, you may not be allowed to get a 30-year Pag-IBIG loan because it is required that you
complete paying off your mortgage before turning 65 years old. However, an exception can be made if you
can find a company to insure you beyond the age of 65.

Spouse’s income
If you are applying for a home loan with your spouse, their income will also be evaluated.

Dependents
Your lender can base your ability to pay off a loan on the number of dependents you have.

Stability and continuity of occupation

In general, you must be employed for at least two years when applying for a housing loan. If you are self-
employed or own a business, you may still get a housing loan approval. You might have to submit
additional information about your taxes, profits, income, business permits, and other relevant documents.

Loan amount
Banks allow a minimum loan amount of PHP 800,000 on average. However, this still depends on the
location of your desired property. Projects outside Metro Manila may result in a lesser loan amount. For in-
house funding, the loanable amount depends on the real estate developers.

Pag-IBIG grants a loan amount of PHP 600,000 to PHP 6 million. However, you have to meet certain
conditions such as the capacity to pay and the actual need for funds.

Credit history
Your credit history also greatly affects your housing loan eligibility. This serves a record of responsible
repayment of debts. Your credit history is created through collating data from various sources like
government agencies, banks, collection agencies, and credit cards.

If you don’t have any credit history yet, you can build yours by getting a credit card from the same bank you
intend to borrow from. Then, you can use the card regularly and pay your bills on time. As you build a good
credit history, you’ll get to prove that you have a stable source of income, know how to be responsible with
your bills, and can pay dues on time.

What is a Credit Report?

A credit report is a document that sums up your credit history including your loans and credit card accounts.

Your credit report is a detailed account of your credit history, while your credit score is a three-digit number
that represents the data in your credit report. Your credit score is calculated based on your credit report.

Companies and financial institutions you do business with submit information on your financial transactions,
including your payment history, to the Credit Information Corporation (CIC).
The CIC is the public credit registry and repository of credit information in the Philippines. Republic Act No.
9510 or the Credit Information System Act (CISA) authorizes the CIC to receive and collate basic credit
data from the following entities[2] into credit reports:

 Banks (universal, commercial, thrift, and rural)

 Credit card companies
 Private leasing and financing companies
 Government-lending institutions (GSIS, SSS, and Pag-IBIG Fund)
 Cooperatives and cooperative banks
 Microfinance institutions
 Telecommunications companies
 Insurance companies and mutual benefit associations
 Utility companies (electricity, cable providers, etc.)

Credit reports contain three types of information:

 Personal and/or business accounts

 Loan accounts
 Credit card accounts, installment, and/or non-installment contracts

Credit reports include both positive data (timely debt payments) and negative data (late payments or non-
payments)

1. Personal/Business Information
For individual credit reports, this section includes the name, birth date, address, contact information,
employment data, TIN, SSS/GSIS number, and other details on the borrower’s government-issued ID.

A credit report for business includes the company name, address, registration date, gross income, monthly
expenses, and contact details, among others.

2. Loan Contract Information

This section shows details of your past and present loan contracts with banks and other companies. If
you’ve had a car loan, personal loan, or mortgage either as a principal borrower or co-borrower, it reflects
on your credit report.

Your utility and telecommunication subscription (e.g., cable TV, mobile postpaid plan, etc.) also appear on
the document.

Particularly, credit reports list down detailed information on the following:

 Loan types
 Loan amount
 Account balance
 Payment history, including overdue payments
 Contract start and end dates

3. Credit Card Account Information

There’s a separate section for credit card records and details, which include the account balance,
status, credit limit, and payment history for each credit card owned.

Aside from gathering and consolidating credit information, the CIC also provides different entities in the
Philippines with access to credit reports.

CIC also has its accessing entities or those financial institutions submitting credit data to the CIC database.
The CIC, of course, authorized such entities to access credit data.

When you apply for a loan, credit card, utility subscription, or mortgage, the lender or
cooperative/utility/financing company may check your credit report, credit score, and other relevant
information (income, business/employment data, etc.) to determine whether to approve or reject your
application.
Why are Credit Reports Important?

1. Get Fair and Objective Credit Evaluation

The data in a borrower’s credit report helps a lender evaluate the risk of lending money to that person.

A good record of timely payments as reflected on your report helps you get a low-interest rate on a loan.
Conversely, poor debt payment track records lead to either a denial or a high-interest rate.

2. Improve Your Creditworthiness

Checking your report helps you find out if your accounts are in good standing and if you can qualify for
loans and credit cards.

If you detect any inaccuracy in your credit report, you can request a correction with the concerned financial
institution. This will help you improve your creditworthiness and your chances of getting approved for loans
and credit cards. You may also file a dispute with CIC through its Online Dispute Resolution Process
(ODRP) if you find any inaccurate, outdated, or incomplete information on your CIC credit report.

3. Achieve Your Financial Goals

With positive credit information, your report can vouch for your financial reliability to lenders, helping you
get better rates for a new house.

Process of getting your report from the CIC.

1. Schedule an appointment online through the CIC Online Appointment Scheduler (“CICOAS”).
2. After securing an appointment date with the CIC, appear in person at the CIC office during the scheduled
time. As of date, CIC requires face-to-face transaction as it is still in its inception stage of providing credit
reports. It will issue an advisory once online processing is already available.
3. Validating your identity using at least two (2) unexpired government-issued identification cards.
4. Pay PHP 55 for your report request. (You can do this on-site)
5. Your credit report will be drawn by the CIC.
6. Once drawn, the CIC may request for additional validation to ensure your identity.
7. You will receive your CIC Credit Report via email on the same day.

You can also get your credit report through any of the CIC’s accredited credit bureaus:

 CIBI Information, Inc.

 Compuscan Philippines
 CRIF Philippines
 TransUnion Philippines

Your credit score is a three-digit number that represents your creditworthiness or ability to pay off a loan
based on the information in your credit report.

A credit score in the Philippines ranges from 300 to 850, with 850 being the highest rating. The higher your
credit score, the better. Banks, insurance companies, and other financial institutions use the credit score,
among other things, to assess a borrower’s credit risk.

Credit bureaus calculate credit scores based on five criteria. Take note of these factors when improving
your credit score:

1. Credit payment history: How regular you pay your debts, how much you repay, and whether
you’ve paid on time or not
2. The amount owed or credit utilization ratio: How much of your credit limit you spend. If you’re
maxing out your credit card, you’re likely to miss your loan repayments in the future and get a lower
credit score.
3. Length of credit history: The average age of your credit card and loan accounts, and the length of
time since those were used
 4. Types of credit used: Whether you’ve availed of a variety of credit types such as auto loans,
mortgages, and credit cards. This information gives lenders an idea if you can manage different
credit types responsibly.
5. New credit: How often you’ve opened new accounts. Applying for multiple credit cards or loans at
once can hurt your credit score.

What Factors are Excluded from Your Credit Score?

 Income
 Assets
 Age
 Gender
 Affiliations (religion, race, ethnicity, political affiliation, etc.)
 Non-credit banking information (savings accounts, checking accounts, investment accounts, debit
cards, prepaid cards, and other non-credit bank accounts)

A credit report is a comprehensive summary of all financial transactions, including loans and utility
subscriptions. It contains credit information such as balances and missed payments, as well as personal
data such as name, TIN and SSS/GSIS number, home address, and employer. It’s used as the basis for
computing a person’s credit score in the Philippines.

A credit history is a record of one’s ability to repay debts over the years. It describes how you use
credit and how responsible you are as a borrower.

Created through Republic Act 9510 or the Credit Information System Act, the Credit Information
Corporation (CIC)[4] is the only centralized registry of credit data in the Philippines. The CIC is authorized to
collect, consolidate, and share credit information with all financial institutions in the country.

Banks, cooperatives, insurance firms, and telecom companies submit their clients’ credit history to the CIC,
which then collates the information into detailed credit reports. Authorized lenders can access credit reports
from the CIC.

The CIC has four accredited credit bureaus or special accessing entities that compute credit scores
in the Philippines:

 CIBI Information, Inc.

 Compuscan Philippines
 CRIF Philippines
 TransUnion Philippines

To gain the bank’s trust, you have to prove your commitment and responsibility to pay back what you owe
on time. Your credit report and credit score in the Philippines will be your proof.

Why You Should Improve Your Credit Score in the Philippines

1. Easy to get a loan or credit card

2. Higher loan amounts and lower interest rates

3. Lower insurance costs

4. Better deals on property leases

If you know you have a high credit score, you can use that to haggle with a prospective landlord for just a
one-month advance payment rather than the usual two month-deposit.

5. Higher chances of getting hired

Your potential employers may conduct background checks and even avail of the employment history check
service from credit bureaus in the Philippines. They may also look specifically at your credit score or credit
report to determine how responsible you are as a potential employee.
Filipinos can get their credit report for a minimal fee from either the CIC or one of its accredited credit
bureaus. You can file a request through the CIC’s website. To access your credit report, you’ll need to
present a valid ID (passport, driver’s license, etc.) and provide your personal information (full name, birth
date, and contact details).

In a nutshell, that’s the primary function of a credit registry: to monitor loan transactions by every individual
and financial institution with credit facilities. In the Philippines, the CIC does exactly that and more. Let’s get
to know the Credit Information Corporation a little better.

What is a credit registry?

The World Bank defines the function of a credit registry as the following:

“Credit registries are generally developed to support the state’s role as a supervisor of financial institutions.
Where credit registries exist, loans above a certain amount must, by law, be registered in the national credit
registry.

Credit registries tend to monitor loans made by regulated financial institutions.”

Basically, a credit registry makes sure all loan transactions are accounted for. Banks and loan providers
can’t just loan large amounts of money to anyone. Likewise, an individual can’t just avoid paying credit card
balances and apply for another loan instead.

From the date of application down to the amount of loan transactions, credit registries will keep track of
every detail of everyone’s credit records—loans, credit cards, installment plans, and even utility bills. They
will then use the data to provide you a better look on your financial health in the form of credit reports.

Credit Information Corporation

The Republic Act No. 9510, also known as the Credit Information System Act (CISA), established the
Credit Information Corporation to act as a central credit registry of Filipinos’ credit information.

The CIC is tasked to receive and collect basic credit data from financial institutions and provide access to
standardized information on every borrower’s credit history and financial condition.
Under the supervision of the Governance Commission for Government-Owned and Controlled Corporations
(GCG), the CIC is composed of a 15-member Board of Directors. The government owns 60% shares of the
corporation, while the following associations own 40% of shares:

 Rural Bankers Association of the Philippines (RBAP)

 Bankers Association of the Philippines (BAP)
 Chamber of Thrift Banks (CTB)
 Philippine Cooperative Center (PCC)
 Credit Cards Associations of the Philippines (CCAP)

The board is divided into the public and private sector.

The public sector consists of seven members appointed by the President of the Philippines. Meanwhile, the
private representatives consist of five members appointed by their respective associations. The board also
has two independent directors.

The Credit Information Corporation started enforcing CISA in 2015 by directing institutions with credit
facilities to submit credit data in accordance with its Implementing Rules and Regulations (IRR).

From 2016, the CIC continued to work on its credit information system (CIS) and oriented financial
institutions and the general public on the CIC’s mandate, function, and importance.

By 2017 to 2018, the CIC slowly opened the floodgates to their database as a way to test and validate the
accuracy and completeness of their submission. In their free access phase, they limited the CIS access to
financial institutions submitting actual credit data of their borrowers to the CIC database.
And in 2019, they finally made their credit reports available to the general public through online
appointment. By developing their Online Dispute Resolution Process (ODRP) the same year, they made it
easier for everyone to access their credit information and resolve any issues.

The main goal of the CIC is to provide independent, reliable, and accurate credit information on Filipino
borrowers. As such, it also aims to make responsible borrowers out of every Filipino individual and
corporation.

The Credit Information Corporation wants to normalize the idea of credit responsibility and become the
centralized source of all credit information in the Philippines. They want to make credit information more
accessible to every borrower.

By having a centralized credit registry in the Philippines, loan providers can easily profile borrowers and
reduce their overall credit risk. At the same time, they won’t need to rely on collaterals to provide loans to
borrowers. So, when you apply for a life-changing loan, financial institutions need only to look at your credit
report to assess your creditworthiness.

The Credit Information Corporation mainly provides credit reports, a summary of a borrower’s financial
transactions. This includes loan contracts with lending institutions, utility subscriptions, and other
obligations which the CIC is authorized to collect.

They also offer an online dispute resolution for consumers to file disputes in order to correct any erroneous,
incomplete, or outdated credit information provided by entities submitting positive and negative data to the
CIC.

Aside from that, the CIC offers accessing entity certification and in-house technical training to financial
institutions mandated to contribute credit information to the CIC database. They also produce educational
materials like pamphlets and story books as a way to explain the importance of credit information to the
general public.

Only accessing entities and accredited credit bureaus or Special Accessing Entities (SAE) can access the
CIC database. Accessing entities may also access through their preferred SAE.

SAEs provide services for web portal access, batch access, application to application, and other value-
added services such as credit scoring.

Upon completion of registration, accessing entities can access credit reports for PHP55 each.

While the CIC is exempted from the Data Privacy Act of 2012, they utilize state-of-the-art technology to
prevent any data breach from their end. They ensure that only the borrower can request and personally
obtain his or her credit report.

The CIC conducts a Know-Your-Customer (KYC) process when obtaining a credit report to ensure the
safety of credit data. Financial entities can also access a borrowers’ credit report subject to the explicit
authorization of the borrower.

Pursuant to the Credit Information System Act, the CIC obligated financial institutions to notify their existing
borrowers that they are mandated to submit all of their borrowers’ credit data to the CIC. They were also
tasked by the CIC to insert a notification clause in loan applications that lets the borrowers know about the
submission of their credit data to the CIC.

Furthermore, the CIC ensures transparency by using their official website to inform the public about what
they do, as well as updates and advisories about their operations. They also update the official list of
submitting entities on their website to let the public know which financial institutions are affiliated with them.

And lastly, availing credit reports enable borrowers to see how financial institutions see their
creditworthiness when assessing their loan applications. This lets them improve their credit score or correct
erroneous or outdated information submitted on their behalf.

“Can I get a personal loan with poor credit history?”

Choices are rather limited. Generally, banks and government agencies deny loan applications from
borrowers with a poor credit score.

Other types of lenders in the Philippines, however, do accept and approve loans for people with bad credit
history.

Some informal moneylenders in the Philippines don’t conduct credit checks or evaluation. Others do, but
the borrower’s credit score or credit history isn’t the most significant deciding factor for loan approval or
rejection.

Types of lenders that cater to Filipino borrowers with bad credit history.
Private Lenders
Also called online lending companies, private lenders provide all sorts of loans: cash loans, instant loans,
online loans, payday loans, salary loans, and emergency loans. All these loans have minimal requirements
and promise quick approval and disbursement.

These bad credit loan providers typically require only valid IDs and a completed application form. The
internet makes the application process a lot faster and more convenient than traditional loans. Simply visit
the lender’s website, fill out an online form, upload the requirements, and wait for a call from the company’s
representative for data verification. Approval takes as fast as 5 to 10 minutes, and the loan proceeds are
available for withdrawal on the same or next business day.

While you may easily get approved for a bad credit loan, you’ll be charged a higher interest rate because
your credit risk is high. Monthly interest rates for loans from private lenders range from 4% to 7.5%, making
them more expensive than loans from banks with monthly rates of only around 1%.

Pawnshops
For those with a poor credit history, another way to secure a loan in the Philippines is put up an asset such
as jewelry or gadgets as collateral.

Pawn loans from pawnshops are secured loans. This means you can get approved for a loan (the amount
depends on the value of your collateral) without looking at your credit report. However, if you fail to repay
your loan on time, the pawnshop can put up your pawned item for sale to recover its loss.

5-6 Lenders
The 5-6 lending scheme has such a bad rap because of its extremely high interest rate of 20%.
However, 5-6 lenders have become deeply rooted in the Filipino culture that people—especially micro and
small business owners—still borrow money from this type of lenders.

Borrowing from lenders that provide bad credit loans isn’t only expensive but also risky. You’re expected to
pay very high interest plus the principal at a short time, usually one to 18 months.
So before you start applying for a bad credit loan, understand its risks, consider how well you and your
budget can handle them, and proceed with caution.

If you decide that getting a loan for bad credit is the only way to go, here are some quick tips to help you
minimize its risks:
 Shop around for lenders. Spend time reading reviews about companies that provide bad credit
loans. Compare the lending companies and their offerings.
 Verify if a lender is SEC-registered. Check the Securities and Exchange Commission (SEC)
website[2] to ensure that you aren’t dealing with a scammer.
 Use an online loan calculator. Online lending companies have a personal loan calculator on their
website. Use it to compute how much you can realistically afford to borrow and check the interest
rate.
 Never lie in your loan application. If you have a poor credit record, don’t hesitate to tell the truth.
The lender can easily detect any inconsistency in your information, and that can hurt your chances
of loan approval.
 Submit complete requirements and application form. Incomplete loan applications get rejected.
So make sure everything you submit to the lender is complete.
 Avoid applying for multiple loans. Considering to apply to different lenders at the same time to
boost your chance of approval? Just don’t, no matter how desperate the situation is.
condo vs house

Advantages of Buying a Condominium

1. More Affordable Than a House and Lot
Exceptions, are upscale condos in business districts like BGC and Rockwell.

For houses in Metro Manila, the median list price is PHP 14.5 million, which is more than double the
median list price of condos in the metro (PHP 5.9 million).

Prices of low-end and mid-range condos are also within reach of first-time buyers and middle-income
families, starting at around PHP 1.7 million for a studio unit in Metro Manila.

2. Convenient Locations
If you live in a condominium, establishments are just a few minutes’ walk or drive away.
Some establishments are located on the ground floor of condominium buildings.

Homeowners living in newer and more developed subdivisions may have access to commercial
establishments as well. But condo owners enjoy easier access to more options within the area.

Because condos are typically located close to business districts, working professionals don’t have to travel
far to get to their workplaces. Living in a condo near the workplace helps one save significantly on
commuting time and cost.

3. Wide Range of Amenities

Condo properties feature amenities like pools, sports facilities (like basketball, tennis, and badminton
courts), gyms, lounge areas, function halls, playgrounds, and other recreational facilities.

Gated subdivisions offer similar amenities in their clubhouse, but they don’t have reception areas that
condos offer. Receptionists in condo complexes provide concierge services, like verifying visitors, assisting
residents during emergencies, and accepting deliveries on behalf of residents.

4. Tighter Security
The level of security in most condominiums is higher compared to subdivisions. Condo communities have
24-hour security and CCTV cameras, and every unit and hallway are equipped with smoke detectors and
fire sprinklers.

While subdivisions have roving guards (with some exclusive villages having CCTVs as well), maintaining
strict security is more challenging in larger subdivisions than in smaller condo complexes.

5. Less Maintenance
Living in a condo unit involves less upkeep than a house and lot. No need to worry about things like cutting
the grass in the yard, getting leaves off the roof, and cleaning gutters.

Condo residents only have to handle the maintenance of their unit’s interior. The condo admin takes care of
maintaining the public and outdoor premises for the residents.

Disadvantages of Buying a Condominium

1. High Condo Fees
Over time, a condo costs more to own than a house because of the steep monthly association dues. These
fees collected from condo residents cover the operational and maintenance costs of the entire condo
complex.

In Metro Manila, monthly dues in condos [2] range from PHP 1,000+ to PHP 8,000+ depending on the size
of the unit, location of the condo, and the property developer.

Condo owners keep paying their monthly dues—which are subject to increases—long after they’ve paid off
the mortgage of their unit.
Adding to the financial burden is the penalty for failure to pay the association dues on time. As much as 4%
interest per month is charged for late payments.

On top of the monthly dues, condo owners are required to pay membership fees and parking fees. Real
property tax (RPT) on the unit has to be paid every quarter or year, as well as the condo owner’s share of
RPT on shared areas and the land where the condominium is built.

2. Limited Interior Space

In a condo, be prepared to live in a tiny space—as small as 18 sqm for a studio-type unit. On average,
condominiums in the Philippines have less than 50 sqm floor area.

Unlike those living in more spacious house and lots, condo dwellers don’t have their own exterior space.
Instead, they share outdoor facilities and common areas with other residents.

3. Less Freedom
In condo communities, extension projects are not allowed because they may affect building integrity. Since
condo spaces are very much limited, there’s no way you can build an additional room for your growing
family.

Condo owners may renovate within the boundaries of their unit, though. But before starting any home
repair or improvement, residents must secure approval first from the property management office.

That’s just one of the many restrictions of condo living. Condo dwellers are also expected to follow
numerous house rules. For example, there are limits on the use of common areas and facilities. Some
condos don’t allow pets, and others that do impose pet policies limit the number and types of pets in each
unit.

4. Lack of Peace and Privacy

Every condo dweller has neighbors above, below, and on the sides of the unit. Nobody is spared from all
sorts of noise.

Advantages of Buying a House and Lot

1. Bigger Spaces
The biggest advantage of owning a house is having a larger interior space, plus an outdoor space of your
own.
Houses have more spacious living rooms, kitchens, dining areas, and bedrooms. Unlike condo owners,
homeowners typically have their own garage and space for laundry and dirty kitchen.

2. Full and Exclusive Rights to the Property

When you buy a house and lot, you own a piece of land that’s exclusively yours. In contrast, condominium
residents share ownership of the land, which is why they don’t enjoy as much freedom as homeowners do.

A house is easier to customize than a condo. As a homeowner, you’re free to change your wall paint any
time or create an additional room. You may construct a veranda, start a garden, or build a small playground
for your kids in the backyard. Nobody can stop you from maximizing your indoor and outdoor space.

You may renovate, repair, or expand your house to your liking. You can even add a second or third floor if
you need a larger space. But before starting your home improvement project, you must secure a building
permit from your city or municipal hall.

3. Greater Privacy
In general, subdivisions have more peaceful neighborhoods than condo communities. Homeowners live
quite farther away from each other.

In a detached house, you’re not sharing the same wall, floor, or building with your neighbors. Even if you
live in a townhouse or duplex, you still enjoy more privacy than condo dwellers. Despite sharing walls, you
and your neighbors have your own separate space.

4. Good Long-Term Investment

A house and lot is a lifetime asset that can be passed on from one generation to the next. Even though the
value of the structure decreases, the land where it’s constructed steadily appreciates over time. This makes
a house purchase a better long-term investment than a condo, which has a lifespan of only 50 years.

5. Development in the Suburbs

Explore options outside Metro Manila, and you’ll find house and lots around four times cheaper than those
in the metro.

Aside from affordable housing prices, suburban areas—particularly Bulacan, Cavite, Laguna, and Rizal—
have been undergoing rapid urbanization in the last decade. There are now more roads, highways,
commercial areas, and of course, residential developments in these provinces near Manila.

Buying a house in the suburbs now while developments are underway is a smart investment. When these
areas get fully developed, prices of house and lots will certainly go up.

Disadvantages of Buying a House and Lot

1. More Difficult and Costly to Maintain

With a house and lot ownership, you have total control over your property. This also means you bear the
full responsibility for its upkeep. You can hire somebody else to handle different aspects of your home
maintenance, but this can be expensive.

Condo owners share building maintenance expenses with other residents, while homeowners pay for their
property maintenance by themselves.

2. Higher Utility Bills

Having a larger living space comes with a drawback: higher electricity and water consumption. Because of
that, homeowners pay higher bills than condo owners.

3. Long Commutes
Most available and affordable house and lots for sale are located in suburban areas. Travel time to and
from central business districts, where most people work, takes about two to four hours.

With the current state of our mass transport system, homeowners who live outside Metro Manila would
have to endure long and tiring daily commutes.

Condo vs House: 3 Factors to Consider When Choosing a Property

1. Your Budget
A home purchase is one of the biggest investments you’ll ever make. Regardless of the property type you
decide to buy, it has to be something you can afford.

How much of your income should go to home financing? As a rule of thumb, you shouldn’t be spending
over 30% of your gross monthly income on your housing amortization. Otherwise, you’ll quickly drain your
savings.

2. Location
Where you want to live largely affects your home buying decision. If you love the convenience of city living,
then buying a condo makes a more practical choice.

However, if you prefer a more laid-back and peaceful environment, you should buy a house and lot situated
outside Metro Manila.

3. Your Lifestyle and Status

Another important consideration when choosing between a condo vs house is where you currently stand in
life. For example, the needs of a newly married couple looking for a place to call their own are entirely
different from an OFW looking for a profitable real estate investment.

Who should buy a condo:

 Young professionals who are single and living a busy, fast-paced life
  Newlyweds
 Small families with one or two kids
 Former OFWs who are used to condo living in Hong Kong, Singapore, Japan, South Korea, and
other countries with mostly high-rise residential buildings
 Empty nesters (parents whose children have grown up and moved out)

Who should buy a house:

 Large families of five or more
 Pet lovers
 People looking for long-term investments
 Retirees