How a Secured Credit Card Helped me Improve my Credit Standing

While the Philippines has no established credit scoring system yet, banks have a way of checking if you have a a good credit standing or not. They can see if you have unpaid credit card debts or loans which will greatly affect their decision when you apply for a bank loan of any kind.

So, what to do if you have an unpaid credit card debt? Call your bank and come to an agreement on how to settle your debt. I have shared my experience in a previous post.

How to Get a Clearance for your Credit Card

Getting a secured credit card is a good option.

But it will take awhile for your name to get cleared from the “black list”, a term coined to refer to a shared database where records of unpaid credit card debts and loans are being kept.

With a secured credit card on hand, you will have to prove to the banks that you are already capable of managing your finances. You will need to of course use it but with extreme caution so that you won’t end up accumulating debt again as you did in the past.

It will take about a year or two before other banks will notice you. Within this time, you may start receiving emails or text messages from agents offering you loans or even credit cards. This is one of the signs that you are now slowly gaining back their confidence.

Be very careful about these offers though. I personally never entertained them at first. I did not need another credit card nor I have a huge reason to apply for a bank loan yet.

After almost two years, I eventually tried applying for a personal loan.

Citibank approved my application and not only did I received the money that I needed, it came with a credit card too!

It’s safe to say that I was able to re-gain our local banks’ trust after many years of having a bad credit standing.

Related post:
Security Bank Secured Credit Card or Fast Track Program

7 Things you Need to Know Before Getting your First Credit Card

Have you been wanting to get a credit card? Have you tried applying for one but got rejected? Here are some credit card facts that may help you decide or gauge if whether or not you are ready to own one.

These are all based on experiences and not a professional advice. I am sharing them because I myself did not know these when I got my first credit card ten years ago.

I would have maintained a very clean credit record if I did. At that time, I have just started working and I didn’t know anyone (who owns a card) whom I could ask for advice. So here we go.

1. Credit card is like a loan.

A bank will lend you the money, and you will need to pay them back. Which means that ideally, you should not be using the card in buying stuff that you can not afford to buy in cash. Credit cards are helpful, and in fact could help you save money in many ways if you know how to use them smart.

2. Credit cards will not make you rich.

Instead, it could lead you to spending way beyond your means and accumulate debt. On the other hand, a credit card can become a useful tool when you know how to use it wisely as mentioned above. Items that you can buy via installment plans at zero interest is a common example; you won’t need to shell out a huge amount at once but rather pay it in months. You can also take advantage of various promos, get discounts, earn points, and the like.

3. Never look at the required “minimum payment”. Instead, check your total amount due and pay that amount in full.

The minimum payment is calculated at ONLY 1% to 3% of your total outstanding charges. Paying only the minimum is like adding up interests to your debt. Most people who ran away from their credit cards and got “black listed” have started from doing this practice. Again, always look at the TOTAL amount due and pay that full amount on time.

4. Late monthly payments are reported to credit bureaus.

Which is why you need to know that owning a credit card requires you to be very disciplined and responsible. Going back to number one, if you cannot buy an item in cash, avoid buying it with a credit card.

5. What happens if you stop paying altogether?

You can never run away from your credit card debt. Aside from not being able to qualify for another credit card, you may not get approved of any form of bank loans in the future. Your record will be sold to credit card debt collectors who will in turn harass you in forcing you to pay. These collectors are unprofessional, rude, and ruthless, you don’t want to deal with them.

6. If you are new to the work force, aim to save money first before getting a credit card.

I recommend having at least Php50,000 in your bank account, or more than thrice your monthly salary. Why, you ask? Because the credit limit that banks will give you will be based on your income and is often more than twice your monthly salary. Just in case you get to max your card out (spending up to the maximum limit), you have at least a fund available to pay your balance. This way, you won’t be relying on your salary to pay your debt. This could make you live from paycheck to paycheck, and you don’t want that to happen to you.

7. It is not scary to own a credit card.

It is only scary if you don’t know how to spend wisely. If you splurge on things you could hardly afford and if you have debts or loans, do not get a credit card. If you have no savings, do not get a credit card. However, if you know that you are responsible and you can control your spending, there is no reason for you to be scared. Again, if you are smart and wise, you can make your credit card work for your advantage.

Are you ready and responsible enough to own a credit card? You can try applying for one from Security Bank. Start by clicking on this referral link:

I wish you the best of luck! Let us know if you get approved. Most importantly, remember these advices when you start using your card.


5 Realities About Owning a Credit Card

I came across an article from Security Bank which upon reading, has inspired me to respond. The title is “5 Wrong Notions About Credit Cards You Shouldn’t Believe” and you can read it in full here. I can’t help but comment on almost everything that was said, and I decided to post my thoughts here. I call it the “5 Realities About Owning a Credit Card”.

All screenshots from Security Bank.

1. You Will Overspend

This is not always true. My credit limit from my fist credit card was more than twice my monthly salary. And then lately, I have a co-worker who was given a credit limit of Php200K. It was also her first credit card, and she’s only been working for over a year. That would be very tempting for any credit card holder, first timer or not. Who would decline such credit limit? She didn’t. But the good thing is she’s very good at budgeting (she later on became my insurance advisor), and I’m glad that Security Bank mentioned budgeting:

The truth is, it is very difficult to not overspend when you have a credit card. I should know based on experience. Not only that you should be very good at budgeting and sticking to your budget, but you should be very cautious to never use the card “in case of emergency”. I would say, you must have enough money in your savings account before applying for a credit card. If your credit limit is Php100K, you should have Php100K in the bank, and not because you have a high paying job.

2. You Will Be in Debt

This is a tough one, and is synonymous to overspending. Spending wisely is often not in the vocabulary of a credit card holder. How could one spend wisely anyway when you get offers and discounts from different establishments almost every week? I will stick to my advise of saving money first. Don’t get a credit card if you don’t have at least Php50K in your bank account.

3. You Can Damage Your Credit Card Score

I am “quoting” both paragraphs under this item because they talked about those perks and promos. These are evils that will tempt you to use your credit card and accumulate debt. Budgeting is once again mentioned, and I’d say having an enormous self-discipline should always come around the topic of budgeting.

My credit score has been damaged big time (although, we do not really have have credit scores in actual numbers here in the Philippines). This was confirmed when my home loan was rejected by all banks that I applied to. Thankfully, I was able to fix this through a bank clearance for my credit card.

4. Your Monthly Bill Payments Are Reported to Credit Bureaus

In relation to number three above, I know that I have already been blacklisted by credit bureaus. I am working at rebuilding my credit score by promptly paying my monthly amortization for my bank loan, and got a second chance at owning a credit card with Security Bank’s secured credit card.

Yes, you will get reported to credit bureaus when you fail to settle your credit card debt. And what are the consequences? Apart from being harassed by debt collectors, you will never be approved of any form of bank loans anymore.

On the other hand, I agree that this should not scare you from getting a credit card, but rather push you to use your card correctly.

5. Your Credit Utilization is 0%

I don’t know what this means, honestly. What I’m sure of is you can use your card up to the maximum limit.

In general, owning a credit card is nightmare to those who are not good at managing their finances, and a joy to those who are using it right. While there are lots of credit card holders who are buried in debt, there are also many who are enjoying its benefits and that is because they have the discipline to spend within their means.

I definitely do not encourage you to get a credit card if you could barely save money every payday. Save first, and before you know it, some banks will be offering you credit cards without you needing to apply. My friend whose initial credit limit is Php200K that I mentioned above is a perfect example. Because she’s been actively saving money after landing her first job, a certain bank contacted her and sent her the card.

So if you are thinking about applying for a credit card, my advice is – save now and get a credit card later. Aim to save at least Php50K to Php100K.

Do you think you are ready to get a credit card? Start by clicking on this referral link:

I wish you all the best!