Responsible Borrowing

Regarding personal and financial priorities, obtaining credit is one of the important goals you should start with. Starting to plan for the future now will impact your ability to manage financial matters. Matters like availing a loan, starting a business, buying a property or even seeking employment. Unlike before, you now have options that can assist and help you earn more and improve your economic status.

Borrowing money is a good option if you don’t have the buying capacity just yet. This shouldn’t be seen in a negative light because it can actually open opportunities for you to achieve long term goals or earn more as long as you are to borrow only what you can pay within the period that is mutually agreed upon. It is very important to budget savings and expenses for you to assess how much you can afford to pay when you are to borrow. Some of the biggest companies you know today have also done responsible borrowing as one of their options towards success. This gave them the opportunity to invest and reap bigger rewards in return.

Borrow if you know that you can pay on time

Borrowing is synonymous to obligation. The borrower has to understand that paying is not just enough, it has to be paid on time. This is where building your credit history comes in. Lending institutions report good and bad borrowers to a so-called Credit Bureau. The credit bureau will be the source of whether a person has a good credit profile based on his past or current obligation. Unlike a friend or a relative, these lending institutions do not know you hence, they will rely on what the credit bureau will say if you are “approvable” or not.

A big part of the population in the Philippines unfortunately remains unbanked. Unbanked refers to adults who do not use or do not have access to any traditional financial services, including savings accounts, credit cards, or personal checks. Being unbanked or not having a credit history does not necessarily translate to an ‘approval’. Let’s imagine for a bit that you become a lender then person A and person B both want to borrow money from you. Person A does not have any record of payment of savings at all. Person B’s record shows that he was a good payer in all his loans previously. Who will you lend your money to? It will definitely be person B because of his proven track record while person A is still a 50-50 gamble.

Paying on time gives you a very good credit score that may enable lending institutions to lower their rates, give marketing promos just to entice you to be their client because you don’t neglect your obligations.

Borrow for the things you prioritize, not for what you want

Due to the high number of lenders nowadays, borrowing seems easy. Not paying seems to be easy as well but not paying will have long term implications. You may not have paid a 15,000 peso loan 5 years ago, when you were a bit younger and careless and it seems you got away with it. Now, you have a family or a different set of priorities that you want to avail of a car loan or a home loan but you cannot be approved because of that 15,000 loan? Always borrow because you need it not because you just want it.

Borrow from institutions you trust

There are different places you can consider borrowing from, these can be banks, government entities, or other private financial institutions like AND Financing Corporation. These are real money lenders that can save you all the emotional baggage when borrowing from family and friends. Being a responsible borrower requires you to research regarding the agreement you have with your lender, this includes the returning period, the rate fees, and other conditions that could apply. With these options, all matters regarding you borrowing will be handled securely and professionally so you wouldn’t have to worry much about it.