Studies have shown that 92% of Kiwis don’t know their credit score, 72% don’t know what a credit score is, and a measly 13% have ordered their full credit file.
While it’s rare, it’s possible for an adult not to have a credit score. Most adults who have taken out some form of credit will have a credit history, hence, a credit score.
Your credit score could affect your chances of getting a loan, along with the amount you receive and the interest rate you pay. It’s recorded in your credit report, which can be accessed by financial institutions through New Zealand’s credit reporting companies whenever you apply for a credit or a loan.
Your credit score acts as a numerical representation of how financially trustworthy, reliable, and responsible you are in the lender’s eyes.
The systematic approach most financial providers take when lending money is looking at the person’s past behaviour or the financial history in the credit file. Well, those are some of the basics. It’s a little more intricate than that.
Some of the factors that culminate your final credit score are as follow:
- age of all your accounts
- your monthly repayment history — loans, credit cards, mortgages, etc.
- payment history of your utility expenses — electricity, gas, etc.
- enquiries on your credit report over the last 5 years
- overdue or late payments — any defaults are marked on your credit report, which stay there for up to 5 years.
Repaid defaults are marked as paid. It shows that you’re working to recover from debts and improve your financial situation.
Moreover, you can request a copy of your credit report from any of New Zealand’s credit reporting companies. These 3 provide access to information, which financial institutions will look at when you apply for a loan:
An unblemished credit record doesn’t guarantee you a good credit score though. Unknowingly, errors on your credit report could affect your chances of a loan approval.
Checking your own credit score is also the best way to identify any fraudulent activity, like identity theft, a real concern in New Zealand.
So, apply for a credit report and check your financial history to stay informed. Address any errors beforehand, work to improve your credit score, and make sure you’re on your toes with your finances.
If you need help with finance and financial resources, MyFi has you covered with the right financial service — customised for you!
Note: MyFi and other sources of finance are options that should only be used for once off funding requirements.