TU
(Personal Trans-Union Credit Report) Improvement Program

A personal credit report records a person’s credit history, including lender organizations, credit limit, loan amount and repayment history. It also records the debt defaults, bankruptcies, legal actions related to debt recovery and so on. Therefore, most banks and financial institutions in Hong Kong will refer to the client’s personal credit report when approving a loan application, in order to assess whether the client is a reliable borrower, so as to determine the loan amount and the interest rate. So a good credit rating is very important. Generally the better the credit rating, the lower the actual annual interest rate will be.

Credit rating factors:

Repayment record

This is one of the most important aspects that affects your credit rating. If you are late on a payment (even if it is only one day late), your record will be kept for five years, so paying on time is crucial to maintaining a positive credit rating.

Total balance
(available credit amount)

The combination of the credit balances of all credit cards will be compared with the sum of credits that have been used and are still outstanding. The higher the balance, the better rating will be. For those who have credit usage rates above 50% may have a chance being affected on their credit ratings.

Length of credit history

If there is no credit report (no credit cards or loan history) or the credit history is too short, it will be difficult for the financial institution to refer to and assess the credit standing of the applicant. Shorter periods of maturity therefore may have the opportunity to influence the interest rate applied or granted.

Credit portfolio

The types and number of credit accounts held, including different types of credit such as credit cards and mortgages.

A new credit account

Upon opening a new credit account (application for mortgage, credit card or car loan and so on), the applicant will authorize the financial institution to inquire into his or her personal credit report. The enquiry record will be retained in the credit report for two years regardless of whether the application is successful or not. Multiple record enquiries within a short period of time may cause the financial institution to consider that the user has liquidity difficulties and refuse to approve a credit card or loan application.

Improvement proposal – Debt Reduction Contribution

A low TU Trans-Union credit rating will make it difficult to successfully apply for a loan with a flat rate from banks or large financial institutions . Applicants who need financial settlement will then turn to second-tier financial institutions to borrow high-interest loans, resulting in a debt crisis with the monthly payment exceeding the amount they can actually afford. To avoid this situation, one can choose a debt reduction contribution plan:

To greatly reduce the interest expenses To concentrate monthly repayments To improve the credit ratings

Easier to borrow loans at a flat interest rate from banks or large financial institutionsNo longer having to suffer “high interests”