TransUnion: Lack of Knowledge Regarding Credit Scores Seen as Potential Issue for 99% of Hong Kong
As household debts in Hong Kong rise to historic record levels, TransUnion announced today the results of a survey conducted to evaluate Hong Kong consumers’ awareness and knowledge of personal credit management.
The survey of 515 Hong Kong consumers, conducted by market research firm Ipsos, was commissioned in June 2013 to mark the 10th anniversary of the launch of Hong Kong’s first positive consumer credit reference system. It found that Hong Kong consumers placed far more emphasis on wealth management than credit management. Over half of the survey’s respondents (57%) actively managed their wealth, while only 14% were actively involved in credit management. Credit refers mainly to credit card debts and personal loans.
Even though 40% of those surveyed were aware of the concept of credit management, the survey indicated that only 1% of Hong Kong people have ever reviewed their credit reports and may know their own credit scores. For those 99% of consumers who have never reviewed their credit reports and those who do not know their own credit scores, TransUnion believes that they may possibly be vulnerable to credit risks, such as not being able to obtain bank loans, having to pay higher interest rates and being in danger of identity fraud.
Angus Choi, Managing Director of TransUnion Hong Kong, said, “Hong Kong’s financially savvy consumers are no strangers to obtaining credit from banks whether they are planning to buy property or a car, pay wedding expenses, send children overseas for education, start a small business or pay off tax. Despite this they are missing out on the benefits of consciously maintaining a healthy credit history.”
“Many consumers simply assume that they have a healthy credit record – but in today’s complex financial world, the credit score is an important reference to the banks when approving mortgage, personal or tax loans.”
Each TransUnion consumer credit report contains the credit score of the individual, which ranges from A to J. A consumer with a higher score, for example “A” or “B”, is more likely to obtain loan approval from the bank, and enjoying more favorable interest rates than one who has a lower score.
In addition to the credit score, the consumer credit report also provides comprehensive information on the credit commitments of the individual, such as the number and types of credit accounts he/she holds, repayment history, credit limits and outstanding balances. Regular review of their own credit report will help consumers better assess their credit health and work towards improving it. It also allows consumers to spot inaccuracies that could signal identify theft.
TransUnion provides the following tips to consumers on how they can achieve healthier credit which will have a positive impact on their credit score over time.
Make repayments punctually. Late payments, collection and bankruptcies have the greatest negative effect on your credit score.
Check your credit reports regularly for inaccuracies. Contact the relevant credit provider immediately if you find any inaccuracy on your credit report.
Manage your debts responsibly. Keep your credit card account balances well below your available credit limits.
Give yourself time. Time is one of the most significant factors that can help build healthy credit. Establish a long history of paying your bills on time and using credit responsibly.
Apply for credit in moderation. A large number of enquiries for new credit applications within a short time may be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or over-extending yourself by taking on more debt than you can easily repay.
- “The findings of our study indicate the need for further education to help Hong Kong consumers maintain a healthy credit record to achieve their personal financial goals,” Mr. Choi said.
To celebrate the 10th anniversary of the launch of Hong Kong’s first positive consumer credit reference system, TransUnion is launching a special offer to customers – between 1 October and 30 November 2013, online customers can receive two credit reports for just HK$250 (normal price HK$440) and also get a HK$50 supermarket cash coupon. Current customers who refer a friend will also receive supermarket cash coupons. Details can be found in TransUnion’s website (www.transunion.hk).
TransUnion is also launching a major online advertising campaign in October and November to educate local consumers on how to maintain good credit health.
TransUnion established Hong Kong’s first and only positive consumer credit reference system in 2003 and currently maintains records on 4.7 million consumers. Over the past ten years, the system has proven to be providing value to the economy of Hong Kong. TransUnion operates credit bureaus in 33 countries in five continents around the world. In Asia, the company has a presence in China, Hong Kong, India, Singapore, Philippines, Vietnam and Thailand.