440% more people in the last 3 years conducted personal credit checks to better prepare for getting a long-term loan

Understand your credit score better to ease your mortgage application

To achieve a long-term wealth management target as significant as buying a property, it is important to know your credit score, because it is directly related to your loan offer. Banks obtain credit reports from TransUnion prior to approving any loan application. With property prices skyrocketing and lending criteria tightening, mortgages are becoming a greater concern for a lot of people. A better understanding of your credit information would allow you to take full advantage of your lending power.

Checking your credit score gives you great advantages. Below are three important steps:

Compare interest rate offered by different banks

Interest rates are of utmost importance when it comes to getting a mortgage, which is a multi-million-dollar loan that may take 20 to 30 years to pay off. Different banks offer different interest rates and additional benefits. While it is normal for any smart Hong Konger to compare what every bank can offer, checking your credit report with multiple financial institutions at the same time or within a short period of time may possibly be interpreted as having large financial needs and/or financial instability. Bank may be more cautious with such loan applications which may result in unfavorable interest rates.

The preferable way is to conduct your own credit check, and provide the credit report to different financial institutions for assessment. A credit report and income history should be sufficient information for a bank to make a close-to-final offer of interest rate and reward package. By doing it this way, it leaves no trace on your credit report and has no effect on your credit score, improving your chances of getting a favorable interest rate.

To know your chance of getting a loan

You might think that paying your credit card on time and having a stable income can almost 100% guarantee the approval of your loan application. However, surging credit card payments and online shopping have made it easier for identity thieves to use your stolen personal information, for credit card or loan applications. The actions of fraudsters can affect your credit score in myriad ways without your knowledge until the refusal of a mortgage application. Especially if you are buying a brand new apartment on the spur of a moment whereby contracts are often signed on the spot and the deposit paid immediately. Without prompt mortgage approval from a bank, your deposit risks being forfeited.

To avoid such difficulties, the best solution is to regularly conduct credit checks and report any unusual activity to your bank. Not only does it give any mortgage application a better chance for approval, it would also avoid all sorts of problems caused by identity theft.

Gradually improve credit score to get the best interest rate

A bad credit score is destined to result in a bad interest rate, or worse, a rejected mortgage application. However, credit scores change according to your financial activities. That is why you should check your credit score regularly starting from at least 6 months before you decide to buy a property, which should give you sufficient time to improve your credit score if necessary. For example, do not only pay the minimum credit card repayment due each month as this may bring in to question your ability to repay a mortgage - use your credit card and repay amounts due in an appropriate manner to build a good credit score.

From now till 31 December 2018, new customers can earn 840 Asia Miles when they subscribe to the TransUnion Credit Report 3-month Service (HKD840) on TransUnion website.

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