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Understanding your credit score

Credit score

If you’ve ever applied for credit – be it a home loan, credit card, phone or electricity account – you’ll already have a credit score. Your credit score is used by lenders to assess your credit-worthiness each time you apply for credit. The higher your score, the better your credit rating, and the more likely you are to be approved for credit. Find out more about credit scores and how you can improve yours with this useful guide.

What is a credit score?

Your credit score is calculated using a complex algorithm which determines how likely you are to repay your debt. When you apply for credit, lenders will check your credit score and credit-worthiness by accessing your credit report from one of three credit reporting bureaus in New Zealand. You can also request a free copy of your report from any one of these bureaus.




Your credit report is a comprehensive list of historical data used to determine your credit score – including any accounts, credit enquiries, defaults, infringements, collection notices, judgements, insolvencies and other public record information.

A bad credit score

If you fail to pay your bills in full or you pay them late, you may already have a bad credit score. Other factors that also negatively impact your credit score include too many credit applications in a short space of time, being a guarantor for someone else’s loan who defaults, or not having applied for much credit so not having built up a good credit score.

Having a bad credit score can negatively impact your ability to borrow in the future so it’s important you do all you can to maintain a good credit score or improve your credit score.

By paying your bills on time and in full you can positively impact your credit score. That includes any utility accounts you have like phone, internet or electricity as failing to make repayments to any of these credit providers can also negatively impact your credit score. What’s more, the default could be listed on your credit report for up to five years.

Check your credit score

If you are considering applying for credit, a good first step is to check your credit report for any inconsistencies and immediately address these with the credit reporting bureau. Being aware of any negative data on your credit report will help you resolve any issues so you can get back on track sooner.

If you do have a negative credit score, that doesn’t mean the end of the line when it comes to lending. Mortgage Express works with a number of lenders who specialise in bad credit loans and in most cases, we can match you up with a suitable lender.

Contact one of our mortgage advisers to discuss your financial situation and we’ll help you identify a financial solution to fit your requirements.


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