Do you know your credit score?
Can’t rent a property? Get a mortgage? Borrow at reasonable rates? It could be that your credit score is the problem.
If you’ve forgotten a bill or three in the past, or made late payments, your credit score could be low. You might have to eat humble pie and pay some of those debts from the past.
Cleaning up your credit score can help you get ahead. Lenders, utility companies, landlords and even potential employers look at your credit score. If it reflects that your track record of paying debts and accounts is poor, they could reject your application.
You may not even know what is holding you back. For example, if it’s a tenancy you’re looking to secure, you’ll most likely be credit-checked by the landlord or property manager. If your credit score is low, they’ll usually move on to the next person who they deem to be more likely to pay rent on time.
This article was prompted when I read a posting from a landlord who to his surprise had an old tenant come forward to make good on a Tenancy Tribunal debt. The tenant had reformed, saved a house deposit, but couldn’t get a mortgage thanks to his poor past credit behaviour.
You can find out your credit score by applying for your credit record/ report from all three credit reporting agencies in New Zealand: Illion, Equifax and Centrix. You must do all three.
It’s free, quick and gets easier every time I apply for my credit reports. It took less than five minutes to do all three this week, and I only needed my driver’s licence and a web browser.
Centrix was the easiest, and I had my report by email two hours later. Illion required I set up an online account, but once I did it provided my report instantly. Equifax was the fiddliest and tried to get me to pay $9.95 for a three-day turnaround instead of 10 days at no cost. No thank you. The others provided it same day for free. There is no way it should be three days, let alone 10.
Regular checking of your records can show up debts you’ve forgotten about or, for that matter, credit taken out in your name by scammers, fraudsters or (sometimes) former partners if you haven’t separated your finances completely. I once had a store card opened in my name by an unknown person who had stolen one of my bank statements. It can happen and it’s best to know.
Centrix’s managing director Keith McLaughlin says people approach his agency regularly to tidy up their credit record.
“What I would recommend is that if you are going to go for a tenancy or go for a loan or mortgage that you get a copy of your credit report before you start the process,” says McLaughlin. “Have a look at it make sure that it’s accurate.”
If you can settle any outstanding debts your score will improve immediately, or over time if you are willing to set up a repayment arrangement with the creditor.
Incorrect entries are rare but can be corrected if you go to the party that loaded the default.
Also look at your current behaviour, says McLaughlin. If you ever fall behind more than 10 days with utilities, loans, and other payments it will show up on your credit report. To stop that happening put all these bills on to direct debit and ensure you manage your money so that there are funds in your account to pay. Timely payments will soon help to resurrect your credit score.
Finally, beware of sharing utility bills with flatmates and/or partners if the relationship isn’t going to be long-term. If you move out and forget about the debts, you might find your credit score damaged and you might have to pay the entire bill yourself to resurrect your credit.