Enrolments for Self-Credit Monitoring Increase as Hong Kong Residents Seek New Credit and Look to Better Manage Debt, Reveals New TransUnion Study
- Almost nine in ten (84%) Hong Kong residents believe it is important to monitor their credit score
- Nearly half (45%) of surveyed Hong Kong residents monitor their credit report to help obtain new credit and 28% look to better manage debt
- Consumers increasingly demand free credit monitoring from their financial institutions
A new global study found that the number of Hong Kong consumers that enrolled to monitor their credit with TransUnion (NYSE: TRU) has increased by more than 194% in the three months ended September 2023 compared to the same period in 2021, one of the highest growth rates across all global markets in the study. The study also revealed the diverse motivations for credit monitoring among consumers: the largest share of consumers in the study (45%) begin monitoring with the goal of opening a new credit account, while three in 10 (28%) do so to better manage their debt levels and prevent fraud activities, and 27% seek to improve their credit profile.
In Hong Kong, 84% of surveyed consumers agreed that it is important to monitor their credit, with nearly one sixth (15%) saying it is extremely important. Among these consumers, more than half (59%) of them responded that they monitored their reports at least on a quarterly basis regularly. These findings show that consumers are increasingly aware of the role of a solid credit history in accessing credit.
These were some of the findings in the TransUnion Global Credit Monitoring Study that set out to better understand the distinct profiles, motivations and future outcomes of credit monitoring consumers. The study examined credit behaviours for millions of consumers in both developed and developing markets – Hong Kong, Brazil, Canada, Chile, Colombia, Dominican Republic, Guatemala, India, Philippines, South Africa, the United Kingdom and the United States.
“Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fuelled by the impact of the pandemic on consumer finances and the heightened awareness of preventing becoming victims of credit fraud,” said Nidhi Verma, co-author of the study and Vice President International Research and Consulting at TransUnion. “Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience. These benefits are shown to help lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”
TransUnion surveyed Hong Kong consumers to understand their initial intent to sign up for credit monitoring services, and the benefits they have experienced. The most common reasons were that it was free (33%), to protect against fraud (26%) and to improve their credit score (25%). However, after using monitoring services for some time, added benefits that credit monitoring has enabled them to achieve were also reported: gain visibility to changes on their credit report (39%), learn how to monitor and manage their credit score (36%), get better credit offers (33%) and to learn how to make regular payments (31%).
Credit Seekers Benefit from Attaining New Credit
The study further identified three distinct segments of credit monitoring consumers based on their primary motivation for monitoring their credit. These include Credit Seekers, Credit Managers and Credit Improvers.
Almost half of the credit monitoring population (45%) is doing so with a goal of attaining new credit. Credit Seekers are consumers with prime[1] and above credit scores who monitor their credit with the intention of opening new credit accounts in the near future. When comparing Credit Seekers who monitor their credit to those who do not, significantly higher percentages of credit monitoring consumers opened products such as mortgages (3.4x higher), personal loans (1.7x) and revolving lines (1.3x). This indication of higher credit demand among credit monitoring consumers is of particular interest to lenders that offer these products.
Percent of Consumers Originating a New Credit Account within One Year of Starting Credit Monitoring
Credit Monitoring Consumers | Non-Monitoring Consumers* | |
Mortgage | 27% | 8% |
Personal loan | 24% | 14% |
Revolving line | 9% | 7% |
* Non-monitoring consumers were analysed over the same time from the date when credit monitoring consumers with similar credit profiles began monitoring services
Source: TransUnion Hong Kong database
“Credit seekers, who constitute nearly half of the credit monitoring population in Hong Kong, are a crucial development segment for the credit economy in Hong Kong, especially as younger Gen Z consumers reach adulthood and establish the consumer credit markets growth pipeline,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.
“It is critical that these consumers, whether they are expanding their product wallet or entering the market with their first product, increase their level of financial literacy and awareness through the use of credit monitoring tools. Doing so will not only grant them access to a wider range of products and value, but also equip them with the ability to manage their credit responsibly, thereby contributing to the credit market’s sustainable growth,” he added.
Credit Managers Benefit from Paying Down Debt and Detecting Fraud
The study found that 28% of Hong Kong consumers monitor their credit aiming to keep an eye on their overall balances and credit health. Credit Managers are defined as consumers with prime1 and above credit scores who generally monitor their credit with the goal of reducing or maintaining their balances or monitoring for fraud.
When surveyed, 30% of Credit Managers said they were able to pay down debt as a result of credit monitoring. Additionally, the study also found that their overall balances decreased by an average of 35% within a year after starting monitoring.
Another primary motivation reported by Credit Managers is fraud protection. More than one quarter (26%) of Hong Kong consumers reported that they initially signed up for credit monitoring services to detect and protect against fraud. This benefit is of increased importance considering the continued rise in fraud activity observed since the onset of the pandemic.
Credit Improvers Benefit from Monitoring Scores and Staying Current on Obligations
Credit Improvers, who make up 27% of the Hong Kong credit monitoring population, are defined as consumers with subprime or near prime1 (poor) credit scores who likely use credit monitoring to understand their current credit situations and take steps for improvement.
The study found that Credit Improvers generally experienced credit score improvements of 92 points, on an average, one year after they started credit monitoring. The improvement was better than a comparison set of consumers who have no history of monitoring their credit.
“While Credit Improvers are the smallest segment of credit monitoring consumers in Hong Kong, they also tend to see some impactful benefits in terms of credit improvement,” said Sun. “It is a clear indication that those consumers who are actively looking to improve their credit scores may achieve better results if they monitor their credit and are able to plan their steps and track their progress.”
Free Credit Monitoring Benefits Consumers and Lenders
To facilitate easy access to one’s credit score, consumers are increasingly expecting financial institutions to offer free credit monitoring tools to them. This easy access not only helps consumers but enables lenders to build stronger relationships with their customers.
Three in ten (32%) Hong Kong consumers said that they would continue to bank with a lender that offered free credit monitoring, and more than one quarter (27%) stated they would prefer the lender providing free credit monitoring services when opening new products. Moreover, over one third (35%) said they would prioritize payments to that lender over other lenders’ payments as well.
“More and more consumers now expect financial institutions to offer free credit monitoring services, as it provides them the tools to improve their credit profiles, better manage existing credit and seek new credit in the future. The study clearly demonstrates that providing consumers with credit monitoring access presents significant benefits for financial institutions. Lenders have a prime opportunity to empower consumers with credit education tools that can drive confident growth and inspire consumer trust,” concluded Sun.
For more information about TransUnion’s Global Credit Monitoring Study, click here. Consumers interested in obtaining their TransUnion credit report, credit score and accessing additional credit planning tools can visit here. Learn more about how TransUnion helps individuals protect against identity theft here.
