Credit check behavior in the Philippines may soon be a concern of Filipinos overseas.
Nowadays, foreign employers ask for credit reports from job applicants as part of their background check.
According to a Society for Human Resource Management survey conducted in 2012, ‘companies use credit checks to prevent theft embezzlement and reduce legal liability for negligent hiring.’
Aside from job applicants, foreign and local loan applicants are also asked to submit credit reports as part of the other requirements.
According to a Migration Policy Institute study in 2014, ‘poor access to credit is one of the main reasons migrants find it hard to start businesses.’
Those with a bad credit check history are then worried even after successfully restructuring their credit card debts. They fear that their past credit behavior may take away their chances for a foreign job or prohibit them access to a new loan.
Unfortunately, those who could not get better occupations because of their credit history settle for lower paying jobs instead.
Moreover, credit check histories are well documented.
Danjie Reyes, a returned OFW (Overseas Filipino Worker), feared that his career growth and business loans would be held back by his former credit check behavior.
Reyes used to have a high-paying managerial job but got complacent and wasted all his earnings and maximized all his credit card limits. He ended up having a 300,000-peso credit card debt.
“I was a young manager at that time. I was earning more than everyone else. I really thought that I had much to spend and that included my credit limits. I had three cards that time. All those three cards were maxed out, totally maxed out,” he said in an interview.
“For 11 months, I really had to change the way I spend, the way I live. In fact, I had to take on three jobs. I had a day job. Every night, I worked for another five more hours to earn additional 15,000 pesos a month. And on weekends, I also took consultancy work which paid me 2,000 pesos per day,” he added.
After being successfully able to pay off his debt, Reyes had been more diligent with his money ever since. He worked in Hong Kong for a year, saved a few thousands, and started a business back in the Philippines. He also learned the importance of saving and bought stocks and mutual funds.
But now that he needed a loan to beef up his business, Reyes had not been hearing any word from the bank.
“Not hearing a word from the bank is really frustrating… It’s very difficult. Yes, I admit that at some point I was lost. It seems to be unfair that that scar from your past experiences will hunt you forever. I don’t think that’s fair,” he said.
Reyes hoped that individuals like him would be given chances to explain past credit behavior and be allowed to appeal for new loans.