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a guide to

credit scores

Understanding Your Credit Report and Score

Your credit report is like a financial report card – it reflects how you’ve managed money and credit in the past. These days, more and more organisations rely on credit reports to make decisions about lending, services, and even employment.

If you’ve ever missed a bill or repayment, it can affect your credit score and make it harder (or more expensive) to borrow money. By understanding how credit reports work and regularly checking yours, you can protect your financial reputation and get access to better borrowing terms.

What’s Inside a Credit Report

A credit report usually includes:

Defaults or missed payments – When a bill is overdue by more than 30 days and the lender has taken steps to recover it, this is recorded as a default. Even if you pay it off later, it can stay on your report for up to five years.
Current credit accounts – Information about your credit cards, hire purchases, car loans, mortgages, and sometimes even phone or power bills.
Repayment history – Whether you’ve been paying your bills on time or missing payments.
Credit enquiries – A record of every time someone has checked your credit history.

A Small Missed Bill, Big Consequences

Tane forgot to pay a $75 internet bill when he moved flats. The company tried to contact him but couldn’t reach him, and eventually listed it as a default.
Two years later, Tane applied for a home loan. The lender saw the unpaid bill in his history and offered him a higher interest rate, costing him thousands more over the life of the mortgage.

Lesson: Even small amounts matter – always settle overdue bills quickly.

How to Check Your Credit Score

Everyone in New Zealand has the right to get a copy of their credit report for free. You can request one from any of the three main credit reporting agencies:

Centrix – centrix.co.nz
Equifax – equifax.co.nz
illion – illion.co.nz

You'll need to provide identifying details such as your drivers licence number and address

d. Understanding Credit Scores

Credit scores in New Zealand typically range from 0 to 1000.
Think of it like a traffic light:

Red (0–400): Needs attention – you may find it difficult to get approved for new credit or finding that lending is more expensive.
Amber (401–700): Doing okay, but there’s room for improvement. Lenders may see you as a moderate risk.
Green (701–1000): Excellent – lenders are more likely to approve your applications and may offer better rates.

e. Who Looks at Your Credit History

Your credit report can be checked by a variety of organisations, such as:

Banks and finance companies when you apply for a loan, mortgage, or credit card
Power, internet, or phone providers when you set up services
Landlords when you apply for a rental property
Insurance companies assessing risk
Employers hiring for certain roles (with your consent)

Each check (called an enquiry) is recorded on your report. Having too many enquiries close together can make it seem like you’re taking on a lot of debt, even if you’re just shopping around.

Moving from Red to Green

Story: Moving from Red to Green

Hana’s credit score was 350 (red zone) after missing several phone bill payments when she was a student.Over two years, she focused on paying every bill on time and reduced her credit card balance. When she checked her score again, it had climbed to 720 (green zone), giving her access to a better deal on a car loan.

too many checks

Story: When Too Many Checks Hurt Your Score
Maria was looking to buy a car and visited five dealerships in one week.
Each dealer ran a credit check.
Later, when Maria applied for a personal loan at her bank, the bank saw five enquiries in a short period and assumed she was taking on multiple debts – so they declined her application.

Tip: Limit how many credit checks you approve and ask about finance options before giving permission.

f. How to Keep Your Credit Report Healthy

A clean credit report improves your chances of being approved for loans and can help you get better interest rates. Here’s how to protect and improve yours:

1. Pay bills and debts on time

Late or missed payments are one of the biggest factors that harm your score.

Set up automatic payments or reminders to avoid missed due dates.
If you’re a guarantor on someone else’s loan, remember their missed payments can affect your credit score too.

Story: Building a Positive History
James pays his power bill, credit card, and car loan on time every month.
Under positive credit reporting, these regular, on-time payments are added to his record, showing lenders he’s reliable.
Over time, this strengthens his credit score, even though he doesn’t borrow a lot of money.

2. Understand Positive Credit Reporting

Traditionally, credit reports in New Zealand only recorded negative events like missed payments or defaults.
With positive credit reporting, your report can now also reflect good behaviours, such as making payments on time.

Consistently paying bills on time can gradually improve your score, helping you qualify for better borrowing terms.
This makes it even more important to stay organised and meet due dates.

3. Stay on top of fines

While unpaid fines don’t always appear on your credit report, they may still be visible when a credit check is done – especially for court fines or reparations.
Pay these as soon as possible to avoid complications.

4. Ask for help early if you’re struggling

If you’re finding it hard to keep up with repayments:

Contact your lender as soon as possible – they may be able to adjust your repayment plan.
Reach out to a free financial helpline like MoneyTalks
- Call: 0800 345 123
- Email: help@moneytalks.co.nz
- Text: 4029

Tip: Getting help early can prevent defaults and protect your credit history.

5. Know your options for serious debt

If debt becomes overwhelming, there are formal processes that may help:

Summary Instalment Order (SIO): Lets you pay back what you owe in regular instalments without legal action, for debts under $40,000.
No Asset Procedure (NAP): If you have no way to repay your debts at all.
Bankruptcy: A last-resort option with serious long-term consequences.

For more details, see the Insolvency and Trustee Service.

6. Protect yourself from identity theft

Identity theft happens when someone uses your details to open accounts or take out credit in your name.

Story: A Case of Identity Theft
Someone stole Aroha’s personal details and used them to open a credit card.
She only found out when she applied for a phone plan and was declined because of an unpaid $4,000 debt she didn’t know existed.

By placing a fraud alert and credit freeze on her report, Aroha stopped further activity and worked with the credit reporting agencies to have the false debt removed.

Steps to take:

Ask all three credit reporting agencies to freeze your report and place a fraud alert on it.
Report the issue to the police and IDCare.
Visit the Department of Internal Affairs website for tips on protecting your identity.

7. Fix mistakes quickly

Errors on your report can damage your financial reputation.

Contact the credit reporting agency and request a correction.
Follow up to confirm it’s been updated.

g. Key Terms

TermWhat It Means

Credit reportA detailed record of your borrowing history and repayment behaviour.

Credit scoreA number that reflects your creditworthiness. The higher your score, the more trustworthy you appear to lenders.

Credit historyThe overall picture of how you’ve managed debt and credit over time.

Positive credit reportingA system that records both positive behaviours (like on-time payments) and negative events, giving a fuller picture of how you manage credit.

Takeaway

Your credit report is a powerful tool that influences many parts of your financial life. By checking it regularly, paying bills on time, and addressing issues quickly, you can build a strong credit profile – giving you access to better opportunities and peace of mind for the future.