How Does a Credit Score Work In New Zealand? Your 4 Minute Guide.

A credit score in New Zealand is a number which represents your creditworthiness. The higher the score, the more likely you are to be approved for a loan or credit card. How does it work? Find out here in this 4-minute guide!


Why is my Credit Score Important?

A credit score is a number that represents your creditworthiness – i.e., how likely you are to repay a loan. The higher your score, the more favourable you look to potential lenders.

Your credit score is important because it can affect your ability to get a loan, and the interest rate you pay on that loan. A high credit score means you’re a low-risk borrower, which means you’re more likely to get approved for a loan and to get a lower interest rate. A low credit score could make it more difficult for you to get approved for a loan, or could result in you paying a higher interest rate.

There are a few things you can do to improve your credit score, such as making all of your payments on time, keeping your debt levels low, and maintaining a good mix of different types of loans (e.g., not just credit cards).


How do banks assess a credit score?

Banks assess a credit score by looking at an individual’s credit history. This includes information on whether the person has made any late payments, how much debt they have, and their current income. The bank will also look at other factors such as the person’s employment history and previous credit scores.


How to check your credit score?

A credit score is a number that reflects the risk you pose to a lender. It’s used by financial institutions to help them assess whether they’ll approve your loan or credit card application, and if so, at what interest rate.

There are many factors that go into your credit score, but the two most important are your payment history (35%) and how much debt you have relative to your credit limits (30%). Other factors include the length of your credit history (15%), the types of credit you have (10%), and any new credit applications you’ve made (10%).

You can check your credit score for free with Centrix. All you need is your name, date of birth and address.

Why is my credit score important?


What does the credit score mean?

New Zealand Lenders determine whether you are a good candidate for a loan, by checking your credit score and often, they’ll determine what interest rate they will charge you for a loan, based on how good your score is. The higher your credit score, the lower the interest rate you will be offered.

A credit score is calculated based on your credit history, which is a record of your borrowing and repayment activity. The information in your credit history is used to generate a three-digit number between 300 and 850. This is your credit score.

Lenders use credit scores to assess risk. A high score means you’re a low-risk borrower, which could lead to a lower interest rate on a loan. A low score indicates you’re a high-risk borrower, which could lead to a higher interest rate and could mean you won’t be approved for a loan at all.

Your credit score is important because it can affect your ability to borrow money and the interest rates you’ll pay on loans. It’s important to keep an eye on your score and work to improve it if necessary. You can get free copies of your credit report from each of the major Credit Rating Agencies (CRAs) in New Zealand once per year.

What does the credit score mean?


Tips for improving your credit


1. Check your credit report regularly

You can get a free copy of your credit report from any of the three major credit reporting agencies in New Zealand –


It’s important to check your report regularly for any errors or signs of identity theft.


2. Make all your payments on time

Late payments can stay on your report for up to seven years in NZ and can have a major negative impact on your score. Set up automatic payments for all your bills to make sure you always pay on time.


3. Use a credit monitoring service

Credit monitoring services can help you keep track of your score and notify you of any changes. This way, you can catch any potential problems early and take steps to fix them.

4. Keep your credit balances low

Your credit utilization ratio is the amount of credit you’re using compared to the total amount of credit available to you. Keeping your balances low will help improve your score.


5. Use a mix of different types of credit

Lenders like to see that you can handle different types of credit responsibly, so having a mix of revolving (e.g., credit cards) and installment (e.g., personal loans) debt is good for your score, although make sure you keep your debt low. Lenders want to see that you can afford repayments.

Improving your credit score

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