What factors affect a person’s credit score? What can you actually do to improve your credit score?

In a financial city like Hong Kong, your credit score has a significant impact on your daily life and financial activities. Understanding the factors that affect your credit score is crucial to improving your credit standing and getting better loan terms. In this article, we will analyze the factors that affect your credit score in detail:

Key Factors Affecting a Person’s Credit Score

– Credit history: Credit history is the most important factor that affects your credit score. This includes your payment history, credit card utilization rate, type of credit and length of credit. A good credit history will have a positive impact on your credit score, while a bad credit history will have a negative impact on your score.

– Existing Loans: The number and type of loans you currently have will also affect your credit score. Too many loans may be considered a credit risk, especially short-term and high-interest loans. Maintaining a reasonable number of loans and prioritizing the repayment of higher-risk loans can help improve your credit score.

– Frequent inquiries: When applying for credit, financial institutions will inquire about your credit report. Frequent inquiries may be considered a credit risk and can have a negative impact on your credit score. Avoid applying for credit more than once in a short period of time to maintain a good credit score.

– Credit Card Limit: Credit card limit utilization is an important factor in credit scores. A high utilization rate may indicate an over-reliance on credit, which can have a negative impact on your credit score. Keeping your utilization low can help improve your credit score.

– Length of Credit: Length of credit refers to how long you’ve had an established credit history. The longer the credit history, the higher the credit score. Maintaining a good credit history and avoiding closing long-term credit accounts can help improve your credit score.

What can I actually do to improve my credit score?

There are several things you can do to improve your credit score:

– Make timely payments: Making payments on time is essential to maintaining a good credit history. Strict adherence to payment deadlines and avoidance of late payments and delinquencies are essential for improving your credit score.

– Reduce credit card utilization: Keeping your credit card utilization below 30% reduces your credit risk and helps to improve your credit score.

– Choose the right credit products: Diversifying credit types and avoiding too many high-risk loans can help improve credit scores.

– Manage the number of inquiries: Avoid frequent credit applications within a short period of time to minimize the impact of the number of inquiries on your credit score.

– Maintain a good credit history: Maintaining a long-term credit account and avoiding closing stable credit accounts can help improve credit scores.

How long is credit report information retained?

Credit report information such as credit card payment history is retained until the account is canceled, and in the case of late payments, the history is retained for 5 years after full payment is made.

Bankruptcy and other related negative credit history will not be permanently retained on the credit report, and generally bankruptcy records will no longer be recorded after 8 years from the date of bankruptcy discharge. The above information is for reference only. If you have any questions or information regarding tax return (personal tax return, corporate tax return, accountant tax return), you are welcome to contact our professional consultants and we will provide you with a free quote and consultation service in due course.