In a society where financial needs can arise abruptly, taking out a loan gives you enough resources to live life without worrying too much about expenses. One positive aspect of your loan is your credit score. And here’s the truth: your credit score influences many facets of life, and it matters more than you think. 

In this blog, we will break down why your credit score matters, what affects it, and how you can maintain or build a strong credit score for a more secure financial future. 

What is a Credit Score? 

According to Moneymax, a credit score is a three-digit number that represents your creditworthiness. It’s like a report card for your finances– it informs lenders how likely you are to repay borrowed money based on your credit history.

What are Included in the Credit Score Computation?

Your credit score is determined based on a variety of factors:

  • Payment history
  • Credit Utilization/ Amount owed
  • Length of credit history
  • Account types
  • New credit

In the Philippines, a credit score can be anything from 300 and 850, with 850 representing the highest achievable number. Your credit score should be as good as attainable.

It’s also rather beneficial to land between 650 and 699 or 700 and 759. A credit score below this is considered poor or bad. 

Why Your Credit Score Really Matters

1. Loan Approvals (and Interest Rates)

Whatever kind of loan you’re applying for, lenders review your credit score to determine whether to approve your application and at what interest rate. A higher score usually means better loan terms and lower interest rates, which cost you less in the long run.

2. Renting an Apartment

Many landlords conduct credit checks before approving a tenant. A poor credit score can indicate that you are financially unreliable, which makes it challenging to secure a rental home, even when you have a stable income.

3. Getting a Credit Card

Credit card companies evaluate your credit score when deciding your credit limit, interest rate, and even eligibility. Having a strong score can give you access to premium cards with better rewards and benefits.

4. Employment Opportunities

Some employers, particularly in finance or positions of trust, might review your credit history as part of the employment process. While they will not actually see your score itself, a record of responsible financial behavior can work in your favor.

5. Peace of Mind

A good credit score gives you more than financial benefits– it earns you confidence. You’ll feel more in control of your finances, better equipped to handle unforeseen circumstances, and well-suited for future opportunities.

How to Keep Your Credit Score Strong

Now that you know why your credit score is so valuable, here’s how you can build and maintain a strong one:

1. Pay Your Bills On Time—Always

Your payment history accounts for the highest influence on your credit score. Create reminders, automate payments, or use budgeting apps to ensure you never miss a due date.

2. Keep Credit Card Balances Low

Credit utilization– the ratio of your credit card balances to your credit limits– ought to be as low as possible and, ideally, should stay below 30%. For instance, if you have a credit limit of ₱100,000, strive to maintain your balance at less than ₱30,000.

3. Don’t Close Old Credit Accounts

The length of your credit history also affects your score. Even if you don’t use an old credit card heavily, keeping it open and using it occasionally can benefit your score in the long run.

4. Limit Hard Inquiries

Every time you apply for a loan or credit card, a “hard inquiry” is recorded. While one or two won’t hurt much, too many in a short period can temporarily lower your score. Be strategic about new applications.

5. Diversify Your Credit Mix

Having different kinds of credit, such as credit cards, personal loans, and auto loans, can have a positive effect on your score. But don’t go out and get new loans to simply boost your mix. Only borrow according to your needs.

6. Check Your Credit Report Regularly

Mistakes can always happen. Reviewing your credit report allows you to detect errors or potential fraud early. You’re legally entitled to one free report year from each one of three major credit bureaus– use it!

A Strong Credit Score = A Stronger Future

Your credit score may be just a number, but its impact is powerful. Whatever you want to do with your loan, as long as it has a purpose, a good credit score lays the foundation for all of it.

The best part? It’s never too late to start improving your score. With consistency and awareness, you can take control of your credit and your future.

Secure Your Future—Start Building Your Credit Today with Vidalia Lending Corp.

Want to take charge of your financial journey? Your credit score isn’t just a number—it’s the gateway to opportunities. With Vidalia Lending Corp, you can take control of your finances and work toward a brighter, more stable future. Check out our Loan products and talk to our loan experts today!