Your credit report and score affect access to loans, phone plans, and the rates you’re offered. Learn how credit scores work, how to check your report, how long information stays on file and what to do if there’s an error or fraud.
Quick guide
Whether you have a good credit score, bad credit, or no credit at all, your credit history and score impact your life.
Your credit history helps lenders, landlords, insurers, employers, and others assess how risky it may be to lend money to you, rent to you, or enter into an agreement with you.
Although a credit reporting company holds your credit information, understanding the following can help you to manage your credit history:
- how to check it
- how to fix errors
- how to improve bad credit and build a good credit history
- time limits for items in your history, for example, missed payments and defaults
- what to do if something goes wrong.
Credit definitions
There are several terms used around this information. Each means something slightly different:
Credit history: A list of all your loan transactions including payments and missed payments, defaults, bill payments, mortgages, hire purchases etc.
Credit reports/credit records: A summary of your credit history, sometimes including a credit rating or score.
Credit score: A number, usually out of 1,000, which is based on your credit history and gives lenders a way to measure your reliability with lending. A score above 700 is considered good.
Credit check: When a lender or other organisation asks about your credit history.
Who checks your credit score
A lender, business or potential employer might ask for a credit check to get a sense of how reliable you are with money. You might be asked for a credit check when applying for loans, credit cards, mortgages, bank accounts, phone contracts, car finance, insurance and rental accommodation.
If the lender or business thinks your credit history makes you seem risky, they might reject your application.
In most cases, the person or business wanting a credit check must get your consent first. Consent is not needed for some organisations and businesses, for example, certain public sector agencies, debt collectors.
Why your credit application might be declined or offered at a higher interest rate
When you apply for credit, lenders look at your credit report to assess risk. They may decline your application or offer a higher interest rate based on factors such as:
- past missed payments
- any defaults listed on your file
- how much you currently owe
- recent applications for credit
- whether your repayments are made on time.
This information comes directly from your credit history and repayment behaviour.
You can ask the lender to explain the main reason your application was declined.
Negative impacts to your credit score
Payments and defaults
Missed payments on loans, credit cards or household bills can lower your score.
Defaulting on payments, where a payment over $125 is overdue by more than 30 days and the lender has tried to recover the money. This stays on your credit record even if you repay the amount in full.
Applying for too much credit
Applying for multiple sources of credit in a short space of time, for example applying for four credit cards in three months.
Multiple credit checks
Many agencies/organisations checking your credit score shows you may be seeking more loans or credit than you can afford.
Credit transfers
Shifting debt from one credit card to another.
No credit
Having no credit history means there's no way for future lenders to see if you are a risk or not. This can have the same negative impact as having bad credit.
Insolvency
Filing for 1 of the 3 types of insolvency:
- debt repayment plan (also called summary instalment orders)
- no-asset procedure
- bankruptcy.
Debt collections
You owe money and your debt has been passed on to a debt collector.
Hardship applications
If you applied for hardship with a previous loan, for example, a repayment holiday.
Payday loan and quick finance applications
With their high interest rates, other lenders may consider these a last resort.
Having no credit history is almost as challenging as having poor credit. It gives lenders little information about how you've managed credit in the past, which might lead them to turn you down.
Improve your credit score
Your credit score goes up and down based on what you do with your money. If you have bad credit, or if you have no credit history at all, there are actions you can take to improve your credit score.
Pay on time
Making payments on time is one of the best ways to build a good credit history.
Make sure you:
- pay loan repayments by the due date
- pay household bills on time
- pay at least the minimum amount due on credit cards.
Manage bills and credit cards carefully
How you manage bills and credit can affect your credit score and how lenders view you.
You should:
- pay your credit card balance in full whenever possible
- cancel credit cards and store cards you no longer use
- avoid putting your name on shared bills where possible, as missed payments by others can affect your credit score
- only apply for credit when you need it, as each application may lower your score
- avoid payday loans and quick finance options, which can be viewed negatively by lenders.
Check your credit scores regularly
Review your credit report and make sure the information is accurate.
You should:
- check the information held by each of the 3 credit reporting companies
- ask for any errors to be corrected
- review your report if a lender declines your application.
See credit reporting company details and how to fix errors in your credit report below.
Give your credit history time
Information stays on your credit report for 4 to 5 years.
If possible:
- wait for older negative information to expire before applying for new credit.
Example — Wait to get new credit
In her early 20s, Sarah had three credit cards and didn't take the debt seriously. At one stage she was getting letters from debt collectors. She ended up with a bad credit score. Four years later, she has paid off her debts and wants to buy a house. She checks her credit history and sees her credit card defaults will soon disappear.
Sarah waits one more year to apply for a mortgage, which improves her credit score. While she's waiting, she makes sure all her bills get paid on time and her current credit card is paid off in full each month. The bank accepts her mortgage application.
Time limits for items in your credit history
How long information stays on your credit file
Different types of information stay on your credit report for different periods. For example:
- Payment defaults (overdue more than 30 days and referred for collection) can remain on your credit file for five years, even after the debt is fully paid.
- Repayment history information may also be recorded for several years.
Keeping up with your payments over time helps improve your credit record.
Some information is kept indefinitely including:
- identification information
- multiple bankruptcies.
Example — Default payments
Max loses his job for six months. Even though he tries his best, he defaults on some payments. When he gets a new job, he focuses on getting up to date on his default payments. He checks his credit report once he has paid back his debts and sees the default is still there, even though he paid it off. He calls the credit reporting company and is told the credit record shows he paid it off, but the default stays on his record for five years.
How to see and get your free credit report
Request it from Centrix, Equifax or Experian.
Get my credit report (external link) — Centrix
My credit file(external link) — Equifax
Order your free credit report(external link) — Experian
They should deal with your request within 20 days. If it takes longer, they must tell you why. If you need your credit record urgently, you may need to pay a fee to get it more quickly.
These companies will often give you a copy of your credit record (a summary of your credit history) but may not give you a credit score — the number given to lenders, landlords and others.
How to fix errors on your credit report
Review your credit report carefully for information you do not recognise — such as unknown credit accounts, missed payments, or defaults. If you find incorrect information:
- Contact the organisation (credit provider) that supplied the information.
- Explain what you believe is inaccurate and provide any evidence you have.
- The organisation must investigate and correct any errors.
- Once corrected, the update will flow through to all credit reporters.
If you’re worried someone may have accessed your credit record fraudulently, you can also request a freeze on your credit record.
When you check your credit report, keep an eye out for anything you don't recognise or think is wrong. This report impacts many areas of your life, so it's important it's accurate. If you find errors, follow these steps:
- Check your credit reports from the other companies.
- Report any errors to the credit reporting companies.
- If the credit reporting companies won't act, but you think it's a genuine error, you can complain to the Privacy Commissioner.
1. Check credit reports from other companies
There are 3 credit reporting companies in New Zealand. Lenders and other organisations can go to whichever one they choose to learn about your credit history.
If a report from 1 credit reporting company shows errors, the others might as well. You need to request a correction from each company that has errors.
2. Report errors to the credit reporting companies
Before you make contact, understand your rights.
Your rights
Credit reporting companies must try to make sure the information they hold is correct. These rights are protected under the Privacy Act and the Credit Reporting Privacy Code.
When you complain about errors, the credit reporting company will:
- check the error with its source to get more information, for example, your bank, lender, phone provider
- highlight the particular item in your report to show you are questioning its accuracy
- make a decision about the error as soon as possible — if they need more than 20 days, they must tell you why.
Results
If they don't make the correction, they must tell you and explain why. If the correction is made, they must tell you and tell anyone who has recently asked for your credit report.
3. Complain to the Privacy Commissioner
If the credit reporting company refuses to make a correction you ask for, and you still believe the entry is an error, you can take your complaint to the Privacy Commission.
The Privacy Commissioner will investigate the issue. If a case cannot be settled, it can be taken to the Human Rights Review Tribunal.
Making a complaint(external link) — Privacy Commissioner
Example — Bank error
Jack has a personal loan with a bank. Even though he meets all his repayments, he receives a default notice on his loan. Due to a processing error, his payments had not been credited to his loan for two months. The bank fixes the problem and adjusts the interest charged. Two years later, Jack applies for a starter home loan. His application is rejected because of the old default listing. Jack contacts the credit reporting company and tells them about the error. They contact the bank and ask them to correct the listing. Jack gets his home loan.
If you are a victim of fraud
If you notice these things in your credit record it may mean that your identity has been used fraudulently.
- Accounts you never applied for.
- Defaults you didn't know about.
- Credit enquiries you didn't agree to.
These are different from normal errors, as they are usually unconnected to your other credit history, for example, accounts with lenders you are not familiar with.
Your rights
If someone uses your identity to apply for credit, you can ask any credit reporter to suppress (freeze) your credit file for 10 days. These rights are protected under the Credit Reporting Privacy Code. This prevents new credit accounts being opened in your name while the matter is investigated.
You may also request that an alert be added to your file to notify you of any future credit attempts using your identity.
If you ask 1 of these 2 companies to freeze your history, both will freeze your history.
- Centrix
- Equifax
Consumer Credit Report(external link) — Centrix
Personal(external link) — Equifax New Zealand
Freezing/suppressing is when the credit reporting company cannot give out your credit information. Anyone who asks during this time is told your information is suppressed. This tells them someone else may be applying for credit in your name.
If you want to apply for credit while your information is frozen, you can ask the credit reporting company to give access to a specific person or organisation, for example, a potential landlord.
If you think the identity fraud is still happening after 10 days, you can ask for the freeze/suppression to be extended.
For more in-depth information on identity fraud, see the Privacy Commission website.
How can I protect myself from identity fraud(external link) — Privacy Commissioner
Other problems
If you are having any other problems with your credit history, for example, someone accessed your report without consent, follow these steps — you might not need to do both:
- Contact the credit reporting agency: They should investigate any complaints. Talk to them first.
- Complain to the Privacy Commissioner: If you cannot resolve the issue with the credit reporting company, the Privacy Commissioner can help.
1. Contact the credit reporting company
Whatever your problem, contacting or complaining to the reporting company is your first step. Before you make contact, read our information on:
- your rights
- how to complain.
Your rights
You have rights — and credit reporting companies have rules to follow — under the Privacy Act and the Credit Reporting Privacy Code.
- What can be held: Credit reporting companies can hold specific information about you, for example, credit accounts, repayment history, default payments, insolvency applications.
- Time limits: Time limits exist for your credit information, for example, 4 to 5 years for most information.
- Who can access it: Only certain agencies and companies can access your report for specific reasons, for example, lenders considering your loan application.
- Consent for access: Your consent is needed in most situations, for example, potential landlords or employers, lenders. Some don't need your consent, for example, debt collectors.
- Identity fraud: Ask to have your credit information suppressed if you think you're the victim of identity fraud.
- You have access: You can ask to see what information is held on you.
- Errors corrected: You can dispute errors on your credit report.
- Complaints: You can complain to the credit reporting company if you think your rights have been breached.
How to complain
Credit reporting companies must have an internal complaints process. If they haven't made this clear to you, ask them what it is.
A free financial mentor can help you contact the company, or talk to the company for you. Start by contacting the free helpline MoneyTalks.
Contact information(external link) — MoneyTalks
Before you complain:
- Gather proof, for example, bank statements, credit contracts, emails and letters.
- Think about what you will say, make notes with points you want to cover.
- Decide your ideal outcome, for example, incorrect information removed.
During the complaint:
- Use the word complaint — make sure it's treated as a complaint and not as feedback.
- Take notes — include dates and what was said. If you need to take your complaint to the Privacy Commissioner, this will be helpful proof.
- Stick to the facts — explain the problem and share any proof you collected.
- Say what you want — explain your ideal outcome.
- Take time out — if it gets heated, or you want to think about their response, arrange a time to call or email back. Explain you need time to digest the conversation.
2. Privacy Commissioner
If you’re unable to resolve a privacy dispute, you can complain to the Privacy Commissioner.
Making a complaint(external link) — Privacy Commissioner
More help
Get support at any point from:
- Citizens Advice Bureau (CAB): A free, independent service, run by volunteers. CAB can advise you on your consumer rights and obligations, in person, by phone, or online.
A CAB near you(external link) — Citizens Advice Bureau
- MoneyTalks: This helpline gives free budgeting advice to individuals, family and whānau. Financial mentors can help you understand your financial situation, organise your debt and plan for the future. They can also put you in touch with a local budgeting service and help with issues you're having with lenders. Phone 0800 345 123, or use live chat, email or text, if you prefer.
Contact information(external link) — MoneyTalks