What's your Credit Score?

22 February 2019

What's your Credit Score?

your credit score quick guide aa finance 2

A good credit score is important for anyone to have, and yet, it often doesn’t get the attention it deserves.

Put simply, a credit score is a measure of your ‘credit worthiness’, and can impact your everyday life in many ways – for example, by raising the price of your bills or leading to a higher interest rate on a loan.

But a credit score is also much more than this: it’s a key part of your financial picture, and most importantly, something you can – with a bit of focus – positively influence. So whatever your financial goals are, here are some tips to make sure that you’re on top of your credit score so that it supports your plans and goals.

Step 1: Understand your credit score

Want to make your credit score work harder for you? Knowing your rating is the very first step to improving it. But how?

There are three credit reporting agencies in New Zealand, and depending on which you choose, your credit score rating will be a number between 0 and 1,000 or 0 and 1,500:

As time goes by, your credit score will jump up or drop based on many factors – one of which is your payment history. Things like paying your bills on time positively affect the score, whereas applying too often for credit can damage it.

You can request a copy of your Credit Report from any (or even all) of the credit reporting agencies. Credit Simple, as an example, is a free online tool owned by illion that estimates your credit score, while also providing handy insights on what it all means.

Step 2: Give your credit score a boost

Your Credit Report contains a wealth of information like balances, debts and defaults. Once you know the numbers and understand their impact on your score, you can – if you need to – focus on finding ways to improve your rating.

Have you been missing bill payments? If you’re consistently late, your payment behaviour will damage your score on a regular basis. So the more payments you make on time, the healthier your credit score will be. If you feel you can’t keep track of due dates, you might like to consider setting up automatic payments (or finding another system that works for you).

Unpaid defaults are another common credit issue. In this case, being proactive can make a big difference. It’s a very good idea to contact your provider as soon as possible to discuss an action plan, and make sure you stick to what was agreed.

Remember: once your ‘credit health’ gameplan is up and running, don’t ‘set and forget’ it. Your credit score is a constantly evolving snapshot of your financial life: it’s important to keep track of any movements, so you’ll know what worked and what didn’t.

Think of it as a financial compass to achieve your goals in the long and the short term, whether it’s a personal loan, a mortgage or other financial needs.

Check out these helpful resources, for more information about credit scores and reports:

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article. The links provided in this article are for convenience only; The New Zealand Automobile Association Inc. bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links.


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