GOLDEN RULES
I am a unicorn.
That’s a sentence I never thought I would begin a money column with.
Unicorn is a term used in the credit scoring industry for people with credit scores over 900.
They are so rare they are practically mythical. At least that is what I had been told.
But overnight I became one, making me wonder whether credit unicorns really are that rare, or whether there has been something deeply flawed about the credit rating system.
Every adult has a credit score between zero and 1000, with zero being unspeakably terrible, and 1000 representing a god of money.
They are calculated by the big credit reporting bureaus, including Veda and Dun & Bradstreet.
They compile reports using information passed to them by our banks, our insurers and a whole heap of other businesses.
Banks, finance companies, utility companies and landlords check people’s credit scores deciding whether to make them a loan, get a mobile phone contract, or rent a house.
Unless you live in a cave without a phone, electricity, or plumbing, you have a credit file, and a credit score.
If you don’t know what your score Check your credit score
Check for errors on your credit file Check how you compare to neighbours
is, check it for free with CreditSimple.co.nz, an online service run by Dun & Bradstreet.
When Credit Simple launched last year it was a watershed moment.
Most people in this country don’t know their credit scores, which is a result of how hard it used to be to get your credit report and score. Unless you paid, the bureaus made you wait ages.
The day Credit Simple launched, I checked my score. It was mid-700s, which was disappointingly average.
Then, last week, I got an email from Credit Simple suggesting I check again as ASB and Westpac had started providing ‘‘positive’’ information to it.
Credit reporting used to be all negative. Fail to pay a credit card bill on time, and the fact appeared as a dark stain on your credit report.
By contrast, positive reporting involves banks and other companies telling the credit bureaus when you make payments on time.
Apparently, adding positive information to my credit report caused my score to jump by a staggering 200 points.
I didn’t feel pride, even though Credit Simple tells you how you rank against the other residents of your street, and I was number one in my gratifyingly long road. I felt anger.
Credit scores are supposed to show how credit-worthy a person is. They matter. They can be the difference between getting a home loan, or not, or getting the nod from a letting agency, or being told to take a hike. It turns out the old system was scoring me inaccurately.
The same will be true of others, and still will be for many, as ANZ and BNZ haven’t yet embraced positive credit reporting like Kiwibank, ASB and ANZ.
Some of ANZ and BNZ’s customers will be undiscovered unicorns like me. Perhaps unicorns aren’t such rare beasts as we thought.