How to get online loans in the Philippines

Everything’s digital nowadays, including your shopping and payments of bills. Even better, you can take out loans from traditional banks and other financial institutions with a few clicks online. 

Many lending platforms let you receive funding when you hit financial setbacks but beware and be wise in choosing reputable ones to avoid various risks.

Learn how to get online loans in the Philippines. Note, however, that this article does not provide financial advice. 

How do you apply?

Singapore-based digital bank Tonik explains most should meet the following criteria for online loans: 

• You must be of legal age in the Philippines, which usually means 21 years old for most online banks. 
• Applicants must have Philippine citizenship.
• You should have a stable source of income.
• You should have creditworthiness, meaning you have a good credit score. Learn how to build good credit with this Inquirer USA article.

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Note that some banks may have additional requirements. Moreover, the Bangko Sentral ng Pilipinas-regulated institution says you may need the following documents: 

• Valid IDs like a driver’s license, passport, or taxpayer identification number (TIN) card
• A utility bill or any document that can serve as proof of residence
• Income documents like employment certificates or business registration documents
• Bank statements

Meet these requirements, and you’re ready to start borrowing your first online loan with these steps: 

1. Research available lenders to find one that suits your needs. 
2. Then, submit the requirements, such as the ones listed above. 
3. Fill out the online application and then upload the documents. 
4. Wait for approval.
5. Afterward, review the loan terms, such as loan amount, interest rate, and repayment schedule. 
6. Accept the online loan if you’re satisfied with the conditions. 
7. Wait until your bank account reflects the funds.

How to ensure your online loan gets approved

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Digital and traditional banks check your credit score to determine whether you qualify for your desired loan. They typically rely on the FICO (Fair Isaac Corporation) scoring method that has the following criteria: 

• Payment history (35%): This shows the balances you’ve accrued and what time you’ve paid each one. You get poorer marks as you make more late payments.
• Credit utilization (30%): This is the ratio between the total of your unpaid balances and your credit limit. You must keep this lower than 30% to keep a good credit score.
• Credit history length (15%): This one measures how long you’ve had your credit accounts. Also, it considers how long they have been active and how long it’s been since you’ve used them. It’s best to keep accounts that you aren’t using to prevent lowering your score.
• Credit mix (10%): This refers to the kinds of credit you currently have. It’s best to have a mix because it shows lenders that you can handle multiple types of credit. However, ensure you can pay them on time.
• New credit (10%): Your bank performs a hard inquiry each time you open a new credit account. That brings down this segment of your credit score because it may suggest that you can’t manage your finances properly.

Note that this article does not provide financial advice. Consult a financial advisor to learn the best methods to manage your finances.