Not sure what a credit score is? Or why you should care about yours? This guide has everything you need to know.
A credit score is a point system that tells people how good you are at paying your debts, based on your financial history. It can form part of their decision to lend money to you as lenders want to know that you can afford the debt you are taking on.
Your credit score is based on:
Most scored are out of 1,000. A good score is generally between 500 and 700. If you're higher than that, you're a "credit unicorn" - so congrats if you've achieved this magical status!
It's pretty common to have a lower score when you're young. Usually it means you haven't had enough time to establish a history of borrowing money and paying it back yet. However, if you've got a record of borrowing combined with a low credit score, it may indicate that you need to increase your credit score before applying to borrow again. Whether you haven't had many loans, or maybe made a few mistakes, you can still increase your score over time.
If you have a good credit score, it may indicate to lenders that you can be reliable with managing money.
There are plenty of resources available for you to discover more information about your credit profile. For example, you can request a free credit report from Equifax, a New Zealand based credit bureau.
There are a few ways to bring your score up. It usually takes time and good habits. Check below to see if you're on the right track.
If you're having trouble meeting payments to a lender or company, don't leave it too late and talk to them as soon as possible. They may be willing to help with payment plans or other solutions.