TransUnion data reveals 44% Credit Seekers improved their credit score after three months of self-monitoring

Blog Post09/19/2018
Credit Score

HONG KONG, September 19, 2018 –  A recent TransUnion (NYSE: TRU) study reveals that 140,000 consumers have self-monitored their credit report in a year, of whom 14% were in poor credit health and 3% ran the risk of declaring bankruptcy. Among those who self-monitored, 64% were born post 1980. While members of this cohort actively reviewed their status, their credit rating was below that of other age groups.

With the help of consistent self-monitoring, 44% of consumers with poor credit health improved their credit scores within three months. TransUnion encourages Hong Kongers to use its newly launched Credit Score Calculator to forecast changes in their credit score based on a range of potential future actions.

 

Of 140,000 consumers self-monitoring their credit report, over 60,000 are near-prime or subprime rating

TransUnion, which manages the credit records of 5.4 million consumers in the city, has been providing credit report services to Hong Kongers for 18 years. Since 2016, TransUnion has collaborated with several financial institutions to enable them to offer their customers free credit report services.

Over one year, 140,000 consumers have used TransUnion services through these two channels to self-monitor their credit report*, of which consumers born after 1980 accounted for 64%, though they account for only 30% of TransUnion’s database of credit users. Moreover, while consumers whose credit status is near prime or subprime account for 11% in TransUnion’s database, this figure rises to 41% of those who self-monitor. This shows that while members of the younger generation are eager to monitoring their credit report, they also make for riskier borrowers.

 

Though 14% of all self-monitored consumers have a poor credit rating, 44% of them improved their score with the help of regularly checking their rating

After analyzing the background and changes in the credit statuses of the 140,000 consumers, TransUnion observed several motivations for self-monitoring:

  • Bankruptcy Managers – Consumers falling into this category account for 3% of all those self-monitoring, with a credit status of subprime. Bankruptcy managers monitor their report to prepare for bankruptcy declarations, and all of them had declared bankruptcy within three months after credit report subscription. Unfortunately, this group has grown over the past few years.
  • Credit Improvers – 14% are credit improvers: they had a subprime rating, which might have been the result of using up their credit limit or failing to make a payment, but improved their rating over time. Their credit applications would likely have been rejected by most financial institutions and they could only have accessed credit at high interest rates.
    Nevertheless, 44% of credit improvers managed to improve their credit score after three months of self-monitoring. Of these, 38% improved their score significantly, by 21 points or more. The most obvious way they did this was by lowering their debt. The increase in credit score helps the credit improvers to obtain a more favorable Annual Percentage Rate (APR) from lenders. About 20% of these credit improvers saved up to 16-75 percent in interest costs.
  • Credit Seekers – Accounting for 31% of all self-monitored consumers, with a credit rating of near prime or above. After three months’ of monitoring, their credit limits improved by at least 25%. Among them, 50% opened new credit accounts.
  • Credit Managers – 52% of those self-monitoring are credit managers, with near prime or above credit status. No major changes were observed in their credit within three months of self-monitoring.

 

Credit Score Calculator empowers consumers to improve credit health

Poorer credit ratings and an increasing bankruptcy rate among younger consumers is worrying.

“With the rising popularity of mobile payments, a cashless society can easily distract the younger generation from the importance of credit management, exposing them to higher credit risk,” said Lawrence Lo, Director, Consumer Interactive for TransUnion Hong Kong. “Meanwhile, we also notice that with shorter credit histories, higher utilization rates and higher delinquency rates for both credit cards and personal loans, the credit scores of younger consumers have been negatively affected.”

to illustrate changes in the score based on a variety of future actions, such as applications or the opening of a credit card account or new loan, a record of late payment or changing credit card limits. We strongly encourage consumers to make good use of the Calculator to gain a more comprehensive overview of their credit score, ultimately helping to achieve better credit health,” said Mr. Lo.

 

* Notes: From September 2016 to September 2017.

 

Wait, what about my credit?  I want my TransUnion Report & Score