A Gen-Z guide to improving financial health

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Find out how good financial habits can improve your credit score – opening doors to achieving long-term financial goals

The latest TransUnion Consumer Pulse Survey found that 96% of Gen Z Filipinos (born between 1995 and 2004) believe access to credit and loan products is important to achieving their financial goals. However, only 29% said they have sufficient access to credit, and 50% of Gen Z Filipinos plan to apply for credit or refinance existing credit in the next year.

Access to credit is an important step in everyone’s financial journey. Effective access helps improve financial inclusion, where more people can use financial products and services that meet diverse needs.

With more banks and financial institutions willing to lend funds, these organizations determine an individual’s eligibility and creditworthiness using multiple inputs, including information provided by the applicant as well as accessing and assessing their credit score. Taking into account a person’s payment history, length of credit history, money owed, and credit mix, a “good” credit score could help secure a loan that will serve capital for a business, the funds to buy a car or a house, or the means to recover after an emergency.

In the Philippines, consumer attitudes towards credit are changing. The TransUnion survey also revealed that 40% of Filipinos believe in the importance of credit monitoring, and nearly half (48%) believe their credit score would improve if companies leveraged non-standard information in part of the assessment of their credit score.

As the first international private credit bureau in the country, TransUnion was established in the Philippines in 2011, leveraging alternative data assets where traditional financial data is not available to provide a traditional credit score. Along with products and services that harness the power of information, TransUnion believes that improving consumer credit literacy and helping people develop good financial habits can help unlock more credit for Filipinos.

Here are some tips to help Gen Z Filipinos develop good credit scores and improve their financial health:

Build good credit early habits

With more Gen Z Filipinos entering the workforce, this creates more opportunities for them to participate in the formal financial system. Applying for a credit card is a good first step in establishing your credit history.

Apply for different types of credit

Successfully repaying various types of credit can make a good impression on lenders. This is considered one of the fastest ways to establish a credit score.

Avoid applying for multiple credit cards and loans the same time

Applying for too many credit cards or loans at once can signal a problem and be seen as an indicator of financial stress. Multiple requests and denials can even hurt your credit score.

Manage your minimum payments

Regularly paying above the monthly minimum is a good indicator of good credit management. Not only can credit balances be paid off faster, but going over the minimum can also help save money on interest payments.

Make your payments on time

Credit commitments, including utilities such as telecommunications bills, must be paid on time. As banks and financial institutions use credit history to make their lending decisions, proof of prompt payments can help increase your chances of getting a loan.

Credit is an important means of empowering consumers to achieve their financial goals. However, credit and loans are big responsibilities, so good financial habits are needed to manage them effectively. As more and more Gen Z Filipinos enter the workforce, financial services need to be made accessible to more Filipinos to lead a better life. To learn more about your financial health, request a TransUnion credit report today.

PIA ARELLANO has over 25 years of experience in banking, payment solutions, telecommunications and money transfer services. She was instrumental in establishing TransUnion as a risk management, data and information solutions partner for banks and financial institutions in the Philippines.

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