Have you applied for a credit card here in the Philippines?
Credit card companies are very careful in approving credit card applications. The applicants credit history and present circumstances will have to be evaluated and reviewed if it meets approval criteria.
What are the approval criteria? It varies among banks but among the most common are:
- Monthly Income
The type of credit card that will be given to you as well as the credit limit depends on your monthly income and risk-factors.
Individuals with high salary will usually get the card with higher perks and benefits plus bigger credit limit.
Individuals with average monthly income will get a lower tier credit card with a lower credit limit.
Individual whose monthly income does not meet the set minimum threshold will be denied.
Some cards like BPI Blue Mastercard and BPI Amore Visa requires at least P15,000 monthly income or P180,000 annually. BPI Amore Platinum requires an annual income of at least 1 Million Pesos.
Credit limits may be increased over time depending on the card usage frequency, total amount spend per month, and bill’s paying history, i.e. paying amount due in full, paying only the minimum, etc., and other factors.
iSensey’s founder got approved for a BDO Shopmore card back in 2014, this one is recommended if you are a frequent shopper in SM. Anyhow, the original credit limit at time of approval was P15K, then it was increased to P20K, then P30K, then P40K, then right now at P50K. It took 4 years before the credit limit was raised to P50K. The monthly cc bills are always paid in Full, total amount spend monthly varies greatly. The bank issuer, Banco de Oro, as you see increases the limit over time.
- Credit History: Negative record, Delinquent Payor
Did you once owned a credit card, got into debt, and run from it? Di mo na binayaran? Your credit history might reflect instances of delinquency. There is a big chance that new credit card application will also be denied.
Ang di pagbabayad sa credit card mawawala ba sa record mo? We don’t have a definite answer to this. Some say yes, some say no.
*If in case you paid all your past credit card bills via a collection agency or directly with the bank issuer, make sure to request a Certificate of Payment Completion. You can use and submit this certificate whenever you apply for a new loan or credit card application as proof that you have paid and should no longer be blacklisted.
WILL UNPAID DEBTS EVER GO AWAY?
Some say that after 10 years, some banks will now give consideration and more willing to take risk with those with previous negative history, with the assumption that the financial circumstances of the applicant have changed for the better and / or the debt of over 10 years has been fully paid. If this is true, then this is good news for those who are in this same situation.
*There are others who reports that allegedly it will take 6 or 7 years before your bad record will be removed from file or for a credit card write off to happen.
We know of one who was approved again for a new credit card this 2018, this person had an over P100K outstanding amount due still unpaid, 10 years have passed since last payment. But we also know of a person who has an outstanding credit card debt of P200K+ since 2010, this person was not approved for any new credit card plus was also not allowed to open a bank account with Unionbank due to being blacklisted.
In Philippine settings, no one can be 100% sure about the time lapse needed or number of years needed for your credit history to be back on good standing. It may never be in good standing if you don’t pay all of your past credit card bills plus penalties and interest accumulated over time.
If this is the case with you, do you then have a chance of securing a new credit card? The only way to find out is if you will apply for a card now, submit needed requirements, and then wait for at least a month for status update. If after a month, you did not get any news of approval, assume that your application has been denied.
REASON FOR DENIED CREDIT CARD APPLICATION
Do not expect the bank or cc company to call and inform that your application for a credit card was denied.
Can you demand that the bank tells you the reason for credit card application denial? NO. The banks are under no obligation to inform you the reason behind why you were denied.
*There is a resolution lodged in the senate requiring banks and financial institution to divulge the reason why an applicant was denied for loans and credit cards. Unfortunately, this is still a resolution now. When this becomes a law, if it does become a law, then loan applicants and credit card applicants can demand the reasons behind the denial. But until then, the banks and financial institution are not required to give you the denial reasons.
But we think that it would be good for the banks and credit card issuers to indicate the reason for denial so an applicant may be aware and can take steps to get his or her credit record back to good standing or be removed from being blacklisted by the credit card companies / credit bearer.
- Nature of work
There could be banks which are particular and gives negative rating for some industries. We believe that some banks may not look too kindly on new hires on call centers and BPOs (less than 2 years with the company) due to the high turn-over of these companies.
If you are an online freelancer, Virtual Assistant, blogger, web developer, website content writer, seo specialist, or any work that is done remotely and online, getting credit card approval may be difficult for you especially if you are applying for your first credit card. Did you already experience this?
Although there is a growing online market workforce who are earning way, way above the set minimum wage in the Philippines, some banks are still hesitant to lend loans or give cards to these group. Why? We could only assume that these evaluators and bank officers may not know that income can be stable for this group and that there are online freelancers and webpreneurs who are earning monthly income higher than a bank branch manager.
If you belong to these types of industries and was denied for a credit card, we recommend that you try again to talk with a bank officer, provide as many proofs as you can that will support a claim that your monthly income is stable, and you are worth the risk. Who knows you can get a breakthrough with them?
OFWs may also find it challenging getting approve for credit cards, we could be wrong, of course. If you are an OFW and applied for a card before, please share your story, so iSensey readers may also know.
There are probably LOTS OF OTHER FACTORS that the evaluator will look into beside these that we’ve shared.
GETTING APPROVAL FOR A CREDIT CARD
If a bank gives you a credit card, they are essentially telling you that they are willing to risk giving you credit. If you are approved for a credit card, make sure that you abide by the issuer’s terms and conditions, pay your bills diligently and on-time, don’t default! Protect your credit history!
With the world becoming smaller and smaller, any bad credit information has the potential to haunt you later on in life. If you got into credit card debts in your 20s then even after the passing of years, it may be difficult for you to file for bank loans such as housing loan, car loan, personal loan, and even to get approve for a new credit card unless you settle your obligations.
If you are now blacklisted by financial institutions, make it your aim to clear your record. Deal with your negative credit history, settle all your unpaid dues, clean up your credit record. Get back on the good track.
For those in good standing credit-wise:
Be aware that not all credit cards are equal. Choose a card that matches you, your financial situation, and your lifestyle perfectly.
Evaluate different offers, check online for the benefits of one credit card versus others before you apply for one. Check BDO, BPI, Security Bank, Unionbank, Citibank, HSBC, etc. etc. Compare features, interest rates and charges, and those tiny details.
There are credit cards with no annual fee, cards with fast approval process, cards with travel and shopping rebate perks, and many more options out there. Weigh the offers, compare the benefits, and choose the best credit card!