Have you ever heard of bank staff mentioning “TU” when applying for a personal loan, credit card or even mortgage in Hong Kong? These two letters directly determine whether your loan application will be approved, and more importantly —How valuable is your interest.

This article will give you a deep breakdown of how credit rating (TU) works, and share 5 practical ways to improve your rating that will save you big on interest expenses.

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What is TU rating?

TU refers to TransUnion Credit reports provided. It is the most important credit database in Hong Kong today, recording all of your past loan records, repayment performance and account openings.

The Alliance converts your credit performance into a score, ranging from 1,000 to 4,000 points, and divided into ten levels A to J.

• Grades A - C: Belonging to good, the bank considers you a low-risk customer.
• Grades D - F: The loan will still be approved for medium, but the interest rate may be slightly higher.
• Grades G - J: If you are poor, your loan application is highly likely to be rejected, or you will incur extremely high interest rates.

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How does a TU score directly affect your loan interest rate?

Many borrowers assume that the loan rate is fixed, but in fact, the principle of “risk pricing” is adopted by banks.

1. Huge gap in interest expenditure: Similarly, TU Grade A applicants may receive as little as HK$20 million 2% - 4% Actual Annual Interest Rate (APR); and TU Grade G applicants, interest rates may be as high as 20% or more。
2. Approval Success Rate: The higher the TU score, the higher the bank's confidence in you, and the approval process is usually simpler and faster.
3. Loan Amount: A good credit rating makes it easier for you to get a higher loan amount (e.g. 12-18 times your monthly salary).

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5 real-life ways to boost your TU score

If your credit rating is not ideal, don't worry, TU score is dynamic. With the following 5 methods, you can fix and improve your score step by step:

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1. Repayment on time is Wang Dao

Repayment records account for the highest proportion of credit scores. Even if it is only a day or two late, the credit card number will be recorded. It is recommended to set up Autopay repayments to ensure that every loan and card number is repaid on time.

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2. Credit Utilization Control

Don't “Blast Cards” (Blast Cards)! It is recommended to control credit card spending on the total amount of credit 30% to 50% Inside. For example, your credit limit is $10,000, and your monthly statement balance should not exceed $3,000. If you overdraw frequently, even if you repay it on time, the system will deem you financially stressed and therefore deduct it.

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3. Avoid applying to multiple banks in a short period of time

This is a misconception for many people. Whenever you submit a loan application to a bank, the bank will check your credit report with UnionPay, which is known as a “Hard Inquiry”. Multiple hard queries in a short period of time can cause the score to drop dramaticallyBecause this suggests that you urgently need cash.

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4. Long Term Credit Card Retention

A long credit history is also one of the rating indicators. If you have an old card that has been around for 10 years and has a good record, it is not recommended to cancel it easily, even if it is less used now, as it will prove that you have a good credit history for a long time.

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5. Check your credit report regularly

Sometimes TU scores drop due to incorrect information (e.g. the bank forgets to update your repayment record). It is recommended to periodically request a report from the ring and request a correction as soon as the error is found.

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Summary: Good score = save money

Boosting your TU score isn't an overnight thing, but as long as you keep it constant, you'll save tens of thousands in interest over the future borrowing process.

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