- Despite growth in the overall Credit Perception Index score among the general population, the score of Filipinos outside the capital is only at 58 compared to 77 for those living within the Greater Capital Region
- Filipinos living in urban areas exhibit the most credit knowledge compared to those in suburban and rural locations
- Urban dwellers are the most confident in financial standing, likely supported by their higher credit product ownership
MANILA– Despite a general improvement in Filipinos’ perceptions and knowledge of credit compared to last year, significant efforts are still required to improve these further, especially among Filipinos living outside the Greater Capital Region (GCR). These insights come from the second annual Credit Perception Index (CPI) study conducted by TransUnion Philippines, a global information and insights company and the Philippines’ first comprehensive private credit reference agency.
Launched in 2023, the CPI study aims to assess Filipinos’ credit perceptions based on two factors: their current attitudes towards credit and how likely their views can change in the future. While the CPI score of the general Filipino population grew four points to reach 69 in 2024, the score for Filipinos living within the GCR stands higher at 77, compared to only 58 of those outside the region.
Knowledge gaps grow between urban, suburban, and rural Filipinos
Despite overall credit perceptions being lower among Filipinos outside the GCR, a deeper dive into the study reveals that these perceptions differ across the kinds of communities where Filipinos reside. The CPI score of Filipinos living in urbanized areas stands at 79 – 22 points higher than suburban dwellers (with a score of 57), and 31 points higher than those living in rural (at 48) locations.
Notable gaps were also observed particularly in credit concept knowledge, product knowledge, trust and favorability among the three respondent groups. These gaps grew more pronounced based on community location – the more rural the area, the wider the gap. The biggest difference was seen in credit product knowledge. Urban-dwelling Filipinos scored 70 – 11 points higher than suburban residents (with a score of 59) and 19 points more than rural Filipinos (at 51).
The sources of information on credit products suggest a possible explanation for the discrepancy. The majority of urban residents (65%) cited social media as their most preferred source of information, followed by banks or financial institutions (59%). However, the preference for financial institutions was lower by eight percentage points among suburban residents (51%), and 15 percentage points among rural Filipinos (44%).
In contrast, family and friends ranked highest among both suburban (63%) and rural (60%) groups in terms of their source of credit products information. These findings show that residents in more rural regions tend to prefer alternative sources such as personal networks for credit information over professional organizations.
“Our CPI 2024 reveals significant disparities in credit perception among Filipinos based on community type. Urban residents demonstrate a stronger understanding and thus preference for credit products compared to those in more rural regions, potentially due to differing sources of credit information,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “Given that suburban and rural residents rely more on their personal networks for credit information, this may limit their exposure to the latest credit trends and professional insights.”
Favorability, trust, and knowledge towards credit among Filipinos by community type
Urban Filipinos lead in financial confidence and credit product ownership
Among the three respondent groups, urban Filipinos are the most confident in their financial standing. Over four in every five (84%) said they have a strong understanding of their finances, while close to three in every four (74%) can easily afford their day-to-day necessities. Almost one-third (32%) of urban residents also consider themselves to be of higher income (6%) or upper middle class (26%).
However, the majority of suburban (81%) and rural (84%) populations said they are from the lower middle class or with a lower income. The contrast goes even further: compared to urban residents, confidence in their ability to afford day-to-day necessities was lower by nine percentage points among suburban Filipinos (65%) and 19 percentage points among rural Filipinos (55%). Additionally, over three in every five suburban (62%) and rural (65%) Filipinos often find themselves with limited money at the end of the month.
The rate of credit product ownership emerged as a possible factor impacting the financial confidence of both suburban and rural Filipinos. While over half (51%) of Filipinos living in urban areas own credit cards, ownership falls to 30% among suburban Filipinos, and even lower to 21% among rural dwellers.
Similar trends were also observed in trust and favorability. Four in every five (80%) urban residents see credit cards as trustworthy, but percentages are lower at 72% among suburban Filipinos and 69% among those in rural areas. The majority (77%) of urban Filipinos are favorable towards credit cards. However, only 67% of suburban Filipinos and 64% of rural Filipinos share the same sentiment.
Furthermore, positive perceptions surrounding credit products are stronger within metropolitan areas. Credit cards are seen as “helpful” by 43% of urban residents compared to only 37% of those in suburban and rural areas. These findings show the importance of continued efforts to grow trust, favor, and ultimately adoption of credit products by introducing their positive impacts.
Collaboration and education for equitable financial inclusion
While much has been achieved in recent years to enable greater financial inclusion across the country, there remains more to be done to educate Filipinos outside the urban areas on credit products and services. A holistic, comprehensive effort involving both the public and private sectors is needed to drive equitable access and greater financial inclusion across the different population groups in the country – which is the foundation for growing the Philippines to be a financially resilient nation.
“Financial inclusion for Filipinos regardless of their community is important to us at TransUnion. To grow economic opportunities for Filipinos outside urban areas, we are committed to a proactive engagement strategy to support rural banks across the country,” added Sun. “We provide the latest market updates and data-driven insights and create information campaigns targeting the greater population. With regional economies heading in a positive direction, through education and collaboration, we can help ensure no Filipino gets left behind in the progress towards a more financially inclusive nation where everyone is empowered to build better lives.”
About the TransUnion Credit Perception Index
The TransUnion Credit Perception Index (CPI) study comprised of a survey targeting 1,000 consumers of the general population, as well as an oversample of 200 FinTech professionals between March to April 2024. To gauge Filipino’s current attitudes and future receptivity towards credit, respondents were posed a series of questions to rate their knowledge, trust and favorability surrounding credit and other financial products. The study aims to provide a holistic view of credit perceptions across the landscape and gain further insights to address gaps surrounding public perceptions of credit, what may influence them, and what may shift their perceptions. CPI will be conducted annually to monitor changes prevailing Filipino credit attitudes and perceptions over time.
For more information and insights, please view the full report of the TransUnion Credit Perception Index study.
