How to wipe out your record of credit card debt

There’s no shame in missing out on a payment or two, even three or more with your credit card or other loans. Many Filipinos struggle with paying their bills and the years-long pandemic certainly did not help any. What’s shameful though is to run away from your creditors, hoping that time will make them give up, write it off and you can get away with it.

Sorry to burst your bubble but your unpaid debt is not a secret that will stay only with you and the bank or credit card company you owe. If you’ve tried borrowing money from online lenders, you may have discovered that being late on your payment or not being able to pay at all has given them the right to name shame you on social media. And worse, you gave them that right when you signed up for the loan.

So if you have outstanding loans, or drowning in credit card debts, be warned that no debt is ever truly written off in the Philippines. Here are some information you need to know.

#1 You can’t run away from a credit report

In 2008, Republic Act 9510 was passed otherwise known as Credit Information System Act, which led to the creation of the Credit Information Corporation (CIC). Through CIC, credit reports can now be generated reflecting all the loan contracts of any individual with lending institutions, even utility subscriptions, as well as other financial obligations.

Note that your credit report can only be accessed with your authorization, which is usually collected by the organization you are borrowing from. But before you breathe a sigh of relief, note too that you cannot refuse to have your data submitted to CIC as the law has given them the powers to do so. Like it or not, CIC will continue to collect all the data on your loans and bills, and will share it the minute you apply for a loan or even a job when the company asks for it through your consent.

#2 No escaping the negative database

Before CIC, there was another repository of credit-related information and it may still be very much around. Known within the banking circles as NDB for negative database, this is the one list you don’t want to end up in as it will stay with you for life. The thing with NDB is that no one talks about it openly but it is very real and still accessed by many financial institutions. Not only do they look at this list when reviewing a loan application but even when assessing prospective employees, business partners, endorsers, vendors, and more.

From the whispers I have heard, the NDB is not updated when you pay off a loan. The burden to show proof is on you, assuming you are even told that you are in the NDB and that’s why they won’t lend to you, hire you, or work with you.

#3 No debt clears itself

Did you really think that the years will wipe out your debt and your negative record? Let’s see what happens if you have an unpaid credit card balance.

You will first hear from your bank or credit card company, and there will be reminders via email, SMS as well as phone calls. Around the 180-day mark or when they decide to write it off, they will turn over your account to a third-party collection agency. You’ll get legal notices and more calls and these agencies won’t give up until they catch you and you pay it off. You can change your mobile number, move to a different address, but your record will stay with them until the debt is settled. In the meantime, that unpaid credit card debt will end up in your credit report and likely in the NDB, hurting your chances of loan and credit card approval in the future.

#4 Say yes to amnesty programs

Understanding the greater financial burden placed on consumers in recent years, amnesty programs are being offered by both government and private companies. You can initiate this by calling your creditors and asking for amnesty, or you can also wait for announcements or offers. All creditors want to be paid, so if you approach them with a payment plan, they will most likely be open to negotiating.

The best amnesty program is one that waives all interest payments which many times are much bigger than the principal amount you owe. If you can also get a zero-interest payment plan that you can afford, my advice is to take it, take it!

#5 Your turn to ask for proof of payment

Once you have paid off a debt, don’t go out and celebrate yet (and borrow from your credit card again). It’s important to get a certificate of full payment from that credit card or bank, or any lender. Keep a file of that certificate as in the event that your credit report shows you have an unpaid loan, or you are told you are in the NDB list, you can waive that certificate around and demand that they clear up your record.

You can access your credit report anytime from one of CIC’s accredited credit bureaus, CIBI Information Inc. through the CIBIApp. You may access the app via your web browser at https://cibiapp.cibi.com.ph/#/login.

Just a warning that you will be asked for a lot of personal information plus two IDs and a digital signature to register. Once you have an account, you can stay on top of your credit history by logging in anytime. Note that if you do not have any loan transactions in your credit report for two years or more, they won’t be able to generate a credit score for you.

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