Credit reporting agencies collect and sell information about an individual’s credit history to get a sense of your risk to money.
This information can be used by lenders, landlords, insurance companies, account openers, and even employers.
Andrew Hubbard of the Citizen’s Advice Bureau gives advice on checking your credit score, improving and fixing your records, and the causes of a bad score.
What affects your credit score
Often people are surprised by negative scores caused by unexpected reasons, he tells Kathryn Ryan.
“We recently had a client who was turned down because he was late paying on a large medical bill and it was his insurance company making the payment on his behalf, but it was on his file. credit.”
Missing payments to anyone you owe money to will negatively affect your score, he says.
“It’s especially helpful to be aware at this time of the huge expansion of ‘buy now, pay later’, which often involves multiple small payments over time, missing them will negatively affect your credit records.
“So we expect more and more people to be affected by this, as more and more people opt for ‘buy now, pay later’.”
A default on payment due (more than 30 days late and more than $125) will remain on record for five years, he says.
Even payments delayed by a dispute with a service provider or company can end up on file, he says.
“[For example a] the builder didn’t do everything he was required to do, so you only made partial payment and maybe you finally fixed the problem, but he still reported it as a payment in default because you never paid the full amount.
Other factors that will trigger red flags include applying for many types of credit, shifting your credit from one card to another, and loans from third-tier lenders.
How to know your credit score
There are three companies in New Zealand that can provide credit reports and you’ll need to check with each to see what information they have about you, says Hubbard.
Businesses are required to provide information to citizens free of charge.
“So it’s Centrix, illion and Equifax.
“The easiest thing to do to find out how to apply to these companies to find out what’s on your credit report is to go to the Consumer Protection website or the Citizens Advice Bureau website where we have links to request your credit report.”
They usually have an online process where you have to log in and provide ID, and then they can email the information or post the information on request, Hubbard says.
“It can take between five and 20 days on average to get that information from them.”
Correcting and improving your score
You can ask for any mistakes to be corrected, but you’ll need to demonstrate proof and that can be a challenge if some time has passed, Hubbard says.
“So of course, [there are] the challenges you may have dealing with several different credit reporting companies depending on the problem with your credit report. »
To improve your score, Hubbard advises people to pay off any defaults, ensure payments are made on time, limit credit inquiries, and cancel any unused credit cards or accounts.
“I guess the good news about improving your credit score is that often lenders in particular will look at your complete credit history.
“So even if you’ve had defaults in the past, if your last two years have a good payment record, that’s likely to be positive, even if your score isn’t as high as you’d like.”