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Citizens use their phones in Quezon City amid the modified enhanced community quarantine on August 16, 2020. Mark Demayo, ABS-CBN News

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Raine Musñgi

ABS-CBN News

MANILA — Millions of Filipinos who faithfully pay their bills and regularly use digital financial services remain shut out of formal credit because the country&#x27;s credit reporting system fails to recognize their financial track record, according to the head of an international policy research organization.Michael Turner, President of the Policy and Economic Research Council (PERC), said one of the biggest barriers to financial inclusion is that payment histories from millions of users of e-wallets and other digital financial platforms are largely not being used to build credit profiles, leaving many borrowers &quot;credit invisible&quot; to banks and fintech lenders.&quot;The 90 million people who use GCash, the people who pay their utility bills on time all the time, who pay rent on time all the time, they&#x27;re entirely invisible to lenders today,&quot; Turner said during ANC&#x27;s Business Outlook. Beyond GCash, Turner said the same problem applies to users of other digital financial platforms, including Maya and other e-wallets, as well as consumers who consistently pay their electricity, water, telecommunications, internet, cable television, and rental bills on time.Without those records, lenders cannot accurately distinguish good borrowers from risky ones.&quot;The data that&#x27;s collected within the Filipino credit reporting system is on people who are already banked,&quot; he said.As a result, many fintech companies automatically reject loan applications from otherwise responsible consumers simply because they lack sufficient credit information.&quot;If there&#x27;s no data, you reject it,&quot; Turner said. &quot;For the vast majority of people, they have no options. They have to go to the &#x27;5-6.&#x27; They have to go to microfinance institutions because they are what we call credit invisible.&quot;The interview opened with data indicating that only about 1% of Filipino loan applications are approved because of insufficient credit information, highlighting the scale of the country&#x27;s credit access problem.<div>Fixing credit data could unlock lending worth up to 45 percent of GDP</div>Turner said the consequences extend far beyond individual borrowers.Drawing from decades of international research covering more than 25 countries, he said countries that modernize their credit reporting systems by collecting complete positive and negative payment data across both financial and non-financial institutions have seen dramatic increases in responsible lending.&quot;There have been some incredible studies... showing that if you go from having a broken or no credit reporting system to having a full-file system... it can increase lending to the private sector sustainably year over year by as much as 45 percent of GDP,&quot; Turner said.Even if the Philippines improves only part of the way, he said, the economy could still benefit from lending growth equivalent to roughly 20 percent to 30 percent of GDP.&quot;That would have an enormous impact on growth of GDP,&quot; he said. Turner noted that despite improvements in digital payments and financial technology, a majority of Filipinos still have limited access to formal credit.While he said precise government data remain incomplete, his assessment based on available evidence is that 70 percent to 80 percent of Filipinos may still lack access to formal lending, despite many already having bank accounts or digital wallets.<div>Digital payments alone do not build credit</div>Turner said one common misconception is that opening a bank account or using an e-wallet automatically improves a person&#x27;s ability to obtain loans.It does not.&quot;The number that they&#x27;re putting forward are banked individuals. But because you have a depository account, it doesn&#x27;t mean that you have access to formal credit,&quot; he said.Instead, lenders need reliable payment histories to assess risk.He argued that the Philippines is sitting on a vast amount of untapped digital information that already exists electronically.&quot;If we&#x27;re going to see this data used as a tool for financial inclusion... then they need to start collecting things like GCash transactions, utility payments, gas, water, electric, telecommunications payments, broadband, cable TV and rent payments,&quot; Turner said. Those records, he said, would allow millions of responsible Filipinos to establish formal credit histories, qualify for lower-cost loans and eventually build wealth by purchasing homes, expanding small businesses or investing in education.<div>Poor data keeps borrowers trapped in expensive loans</div>Turner said the country&#x27;s fragmented credit reporting system also hurts fintech companies and new lenders trying to offer affordable loans.Without enough information to separate low-risk borrowers from high-risk ones, lenders are forced to charge higher interest rates across the board.&quot;They are flying blind,&quot; Turner said.&quot;They are unable to differentiate between a good risk and a bad risk. So they have to hit that interest rate ceiling. They have to charge a very high risk premium.&quot; That, he said, ultimately pushes many Filipinos back toward informal lenders charging significantly higher borrowing costs.Turner also noted that many borrowers outside the formal banking system already pay around 20 percent interest per month, equivalent to roughly 70 percent to 90 percent annually, through informal lenders and microfinance providers, making them largely unaffected by policy rate adjustments from the Bangko Sentral ng Pilipinas.<div>Weak enforcement, not technology, is the real problem</div>Turner said the Philippines already has the legal framework needed to improve credit reporting through the Credit Information System Act (CISA), but implementation has lagged because of weak enforcement.He gave the country&#x27;s current credit reporting infrastructure a score of only 2 to 3 out of 10.&quot;The execution has been inconsistent at best and horrible at times,&quot; he said.According to Turner, many financial institutions either submit incomplete information or fail to report consistently because regulators have limited ability to enforce compliance.&quot;It&#x27;s the proverbial garbage in, garbage out,&quot; he said, describing the quality of existing credit data.<div>Transfer credit bureau to BSP, strengthen enforcement</div>To fix the problem, Turner urged lawmakers to implement reforms that have been discussed for years.His principal recommendation is to transfer regulatory authority over the Credit Information Corporation (CIC) from the Securities and Exchange Commission to the Bangko Sentral ng Pilipinas, allowing the central bank to oversee the country&#x27;s credit reporting system directly.&quot;My nonprofit think tank, PERC, together with the Makati Business Club, recommended first and foremost transferring authority from the SEC to the BSP,&quot; Turner said.He said both the Duterte and Marcos administrations have supported the proposal through executive actions, and several bills have already been filed in Congress.&quot;The issue right now is really one of political will and leadership,&quot; Turner said. Beyond the transfer, Turner said the BSP should also be empowered to require complete and timely reporting from banks and non-financial institutions, while imposing meaningful penalties on institutions that fail to comply.&quot;This is an ink-pen policy solution,&quot; he said. &quot;It doesn&#x27;t cost taxpayers anything to implement this.&quot; <div><iframe width="640" height="360" src="https://www.youtube.com/embed/G6TNSegydQQ?&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe> </div>

Millions of Filipinos who faithfully pay their bills and regularly use digital financial services remain shut out of formal credit because the country's credit reporting system fails to recognize their financial track record.

Millions of Filipinos who faithfully pay their bills and regularly use digital financial services remain shut out of formal credit because the country's credit reporting system fails to recognize their financial track record.

90 million e-wallet users still 'invisible' to lenders, locking millions out of affordable credit: expert

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90 million e-wallet users still 'invisible' to lenders, locking millions out of affordable credit: expert

Raine Musñgi,

ABS-CBN News

Published July 03, 2026 08:00 AM PHT

Read More:

lending

borrowing

credit

credit score

e-wallets

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Credit Information Corporation

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