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How to Improve Your Credit Score

The Lowdown on Kiwi Credit Scores

First up, let’s clear the air. In Aotearoa, we don’t have one universal credit score like the Yanks do. Instead, we’ve got a few different credit reporting agencies (CRAs) – Centrix, Equifax, and illion. Each of these outfits cooks up their own score based on your credit history. The higher the number, the better you look to lenders.

Now, onto the main event – how to give your score a kick up the bum.

1. Get Your Mitts on Your Credit Report

You can’t fix what you don’t know, right? So, the first port of call is to grab a free copy of your credit report from each CRA. By law, you’re entitled to one freebie a year, so make the most of it. Check for any cock-ups or forgotten debts lurking in there.

2. Pay Your Bills on Time, Every Time

This one’s a no-brainer, but you’d be surprised how many people drop the ball. Set up automatic payments if you’re forgetful. Late payments stick to your credit report like chewing gum to a jandal, so avoid them like the plague.

3. Keep Your Credit Utilisation Low

This is fancy talk for “don’t max out your credit cards”. Try to keep your balance below 30% of your limit. If you’re consistently bumping up against your limit, you might look a bit desperate to lenders.

4. Don’t Be a Serial Application Submitter

Every time you apply for credit, it leaves a mark on your report. Too many applications in a short time make you look like you’re on struggle street. So, cool your jets and space out those applications.

5. Keep Old Accounts Open

The longer your credit history, the better. So, don’t be in a rush to close old accounts, even if you’re not using them much. That old Farmers card from your uni days? It might be doing you more good than you think.

6. Mix It Up

Having a variety of credit types can give your score a boost. A mix of credit cards, personal loans, and a mortgage shows you can handle different types of credit responsibly. But don’t go opening accounts willy-nilly just for the sake of it.

7. Sort Out Any Defaults ASAP

If you’ve got defaults on your record, they’re like a bad smell that hangs around for five years. But if you pay them off, they’ll be marked as “paid” on your report. It’s not as good as having no defaults, but it’s better than leaving them unpaid.

8. Be Careful with Buy Now, Pay Later Schemes

These are the new kids on the block, and while they might not affect your credit score directly (yet), excessive use could make lenders think twice. Use them sparingly and wisely.

9. Don’t Be a Guarantor Willy-Nilly

Being a guarantor for your mate’s car loan might seem like a good idea after a few pints, but it can come back to bite you. If they default, it’s your problem too. So, think twice before putting your name down.

10. Consider a Credit-Builder Loan

If your credit’s looking a bit shabby, a credit-builder loan could help. These are designed to help you build a positive payment history. Just make sure you can afford the repayments before you sign on the dotted line.

11. Keep Your Address Up to Date

This might seem minor, but having an outdated address on your credit file can raise red flags. Make sure all your details are current.

12. Be Patient

Rome wasn’t built in a day, and neither is a stellar credit score. It takes time for positive changes to reflect in your score, so don’t expect miracles overnight. Keep at it, and you’ll see improvements over time.

13. Watch Out for Identity Theft

Identity theft can wreak havoc on your credit score. Keep an eye out for any suspicious activity on your credit report. If something looks dodgy, report it to the CRA and the police pronto.

14. Don’t Fall for “Quick Fix” Scams

If someone is promising to fix your credit score overnight, they’re probably trying to pull the wool over your eyes. There’s no magic wand for credit repair – it takes time and effort.

15. Consider Credit Monitoring

If you’re serious about improving your score, consider signing up for a credit monitoring service. It’ll keep you in the loop about any changes to your credit report.

The Bottom Line

Improving your credit score isn’t rocket science, but it does take a bit of effort and discipline. Think of it like training for a marathon – you’ve got to put in the work consistently over time to see results.

Remember, a good credit score isn’t just about bragging rights at the pub. It can save you serious dough in the long run. Better rates on loans and mortgages, easier approval for rentals, even better deals on insurance – it all adds up.

So, don’t put it off. Start working on your credit score today. Your future self will thank you when you’re sipping a cold one in your new home, knowing you got the best mortgage rate going.

And if all this seems like too much hard yakka, don’t be afraid to reach out to a financial advisor. They can help you make sense of your credit report and put together a game plan to boost your score.

Now, stop reading and get cracking! That credit score won’t improve itself, you know.

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