Being recognised by our credit scores is becoming increasingly common these days, so it’s long  overdue that we all take some time to understand exactly what an NZ credit score is, and how it all works.

So, what is a Credit Score and How Does it Work?

In NZ, a credit score is a point system, based on your financial history, that indicates how creditworthy you are. It is a product of how good you are at paying your debt and bills on time. Your credit score will range between 0 and 1000, with your average Kiwi being somewhere between 300 to 850. The higher your score, the better your credit rating will be.

But Why Should I Care About My Credit Score?

A good credit score is crucial because it will usually have a significant influence on three major areas of your ability to get personal loans in NZ:
• Ability to borrow
• Amount borrowed
• Interest rates

Poor credit scores suggest that you are a high risk person to loan to, which may cause them to require a higher interest rate and, or even lead to them refusing to loan entirely.

A higher credit score will indicate that there is much risk involved with lending you money. This means you might be offered more favourable interest rates and have an easier time getting a loan.

What can Influence My Credit Score?

It doesn’t matter if you have a high or low credit score, understanding how you got to this point is key to becoming financially responsible. Your credit score will be influenced by many things, such as:
• On-time repayments
• Amount you borrow
• Lenders used

These behaviours can have different impacts on your overall credit score. A default from last week might have a much larger impact than a missed power bill from four years ago. A range of things will impact your score, but generally, if it influences your ability to make a repayment, it will have a significant impact.

How Can I Improve My Credit Score?

If you’ve got a low credit score, don’t worry – it is possible to improve your score over time. Your first step should be to get on top of your debts.  Get back into a regular payment cycle and avoid missing repayments. Positive repayment histories demonstrate that you have altered your financial habits by showing a record of swift repayments.

Credit score hiccups like a default will become less and less relevant as time goes on, due to current payment patterns being more relevant. Defaults can still have negatively impact your credit score for up to five years, however this can be lessened through other positive credit behaviour.

Make a Comeback with South Pacific Finance

If your credit score isn’t quite as good as you’d like, remember you can always make a comeback. Why Not Finance, can help you take the first steps towards improving your credit score by assessing your situation and helping you get your finances in order. It’s never been easier to enjoy financial freedom. with online same day loans and debt consolidation available!