The Filipinos’ cultural perception of debts and borrowing is one of the main reasons for the bleak optimism and deteriorating knowledge towards credit in society, according to the Credit Perception Index (CPI) 2024.

On Friday, global information and insights company, TransUnion, published the CPI 2024 results and found that among the surveyed consumers between March to April 2024, the larger population requires education and proper access to financial inclusion.

Results showed a widening gap between the unbanked and the general population, especially in terms of credit knowledge. Among the unbanked Filipinos, there is a great deterioration when it comes to their understanding and knowledge of credit products offered by formal channels; In comparison to the general population where 70 percent said they are knowledgeable on the said concept.

Moreover, 55 percent of them who had reservations about credit products reasoned that it was because of not wanting to be indebted. The evident doubt from the unbanked population stemmed from the constant refusal of banks to allow them access to loans due to their insufficient documentation, no proof of income, and lack of credit history.

It must be noted that the country’s harrowing financial literacy situation may be due to the lack of accessibility and understanding of various financial options.

With the current economic status, fewer Filipinos had optimism that their financial situations would improve by next year compared to 2023. This is also caused by their inability to sustain daily necessities, as it leaves them with limited money by the end of the month.

There is a great need to intensify government efforts on the country’s financial inclusion across the country. With the ongoing action to boost the economy, officials are also called on to lift the local income group to the upper-middle class level.