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How to Improve Your Credit Score

How to Improve Your Credit Score

Thursday, 05 December 2024

The credit score is one of the most important indicators of your trustworthiness as a borrower in New Zealand. This score is considered when applying for a loan, renting a property, or setting up a business. New investors always look for your credibility through this score. To live a better life, you should take the most care of your credit Score.

In this article, we will tell you what score is considered good and safe and how you can improve your credit score in New Zealand.

 

What’s a Good Credit Score in NZ?

Here is a credit card score chart that will tell you the main point at the start of the article. You should have at least a score of 500 to have enough reputation but if you want to attract more investors, then try to achieve the maximum score.

  • 0-299: Very poor
  • 300-499: Poor
  • 500-699: Fair
  • 700-899: Good
  • 900-1,000: Excellent

 

Does Credit Score Matter in NZ?

Like some other countries, credit score is considered the main point of trustworthiness, and any person, who wants to deal with you in financial matters, always checks your credibility score. Simply, if you have a good score, dealing with you is risk-free and vice versa.

  1. Loan Approvals: Lenders always check your score while giving you a loan or approving a mortgage.
  2. Interest Rates: You will be charged less interest rate if your score is good.
  3. Utility Contracts: You can do utility contracts like new connection of internet, electricity, gas or water with prepayments.
  4. Rental Applications: If you want to live in a rental house, then landlords will check your record of credit score first. If your score is less than 500, hardly anyone can trust you to give you his house on rent.

Finally, the credit score is a financial key to your success and can make your financial life easy and simple.

 

Tips to Improve Your Credit Score in NZ

Review Your Credit Report Regularly

A credit report is an instrument from which you can track the progress of previous months. You should visit credit reporting agencies, such as Centrix, Equifax, or Illion. Analyze the details critically, and if you find any entry irrelevant to you or some false entry is added to you, immediately open a dispute to remove it from your record.

 

Pay Your Bills on Time

Timely payments can help you to increase or maintain your credit score at a good point. Missing a payment by even a few days can adversely affect your score.

Actionable Tip: Use a diary to note down all your debts and pending payments such as utility bills. Set reminders and alarms on your mobile phone so you will not miss any payments.

 

Reduce Your Credit Card Balances

To show a good borrowing habit, always spend less amount from your card as compared to the total limit of your card. Keep a good amount in your account all the time.

Example: If your credit limit is $10,000, try to keep your balance below $3,000.

Pro Tip: Try to pay your all debts on time so that no extra interest rate or amount will be charged to you.

 

Avoid Frequent Credit Applications

Try to minimize the times when you request the credits. Some companies give credit at the start very easily but for the next credit request, they give you a hard time. So it is always recommended to use the credit option whenever there is no other way to solve the financial issue.

What to do: Only apply for credit when necessary, and research lenders who perform “soft inquiries” for initial checks.

 

Build a Positive Credit History

Responsible borrowing is a good way to improve your credit score. Lend only the amount that you will be able to pay off in the required time. Don’t borrow money in huge amounts that help you for a short time but are impossible to pay within the time limits.

Steps to take:

  • Get a low-balance credit card, that will make it easy for you to manage your finances.
  • Avoid payday loans as they will destroy you finally in financial matters.

 

Clear Outstanding Debts

Keep a special eye on unpaid debts and prioritize them to pay them off on time. You should make a plan that at the specific date, I have to pay the debt and make a financial plan accordingly. You can cut short your household expenses and avoid buying those things that are not included in your life needs. Save that amount and pay the debt from it.

Negotiation Tip: If you are unable to pay on time, then you should rush to creditors and request them to increase the last date of payment. In this way, you can save yourself from late paying debts.

 

Limit Joint Credit Applications

Joint credit accounts can sometimes give unbearable losses whenever your share account holder defaults or does some fraud stuff, you will also be effected. So avoid opening joint accounts until much necessary. Open a joint account if your shareholder is trustworthy and will not give you trouble at any cost.

Best Practice: While maintaining a joint account, keep a record of every payment and track your credit amount reports frequently.

 

Keep Old Accounts Open

Keep only your accounts open that have good continues financial report. End any old accounts that have multiple credit and debt issues.

What to do: Keep older, well-managed accounts active to boost your credit age.

 

Diversify Your Credit Types

Give a mixed touch to your credit such as credit cards, car loans, house building loans, and other debts, and pay them back on time. This gives a good feeling to creditors, and they will start thinking that you can handle your debt in different areas of life, thus increasing the trust of investors in you.

 

Monitor Your Progress

Critical monitoring of your account reports is the most important thing. Always check your credit reports regularly and track the positivity or negativity in them. This is a continuous process and you have to take steps whenever necessary to maintain your good score. The credit score improvement process often takes months or years, so you should be consistent and passionate to handle accounts for long periods without frustration.

How to monitor: Use free credit score monitoring tools provided by agencies like Equifax or Centrix.

 

Common Myths About Credit Scores in NZ

Myth 1: Checking your credit score lowers it.

Truth: Checking is just your right so it does not affect your score.

 

Myth 2: Closing a credit card improves your score.

Truth: It does not improve because in this case, you are keeping your credit history short which cuts down your points.

 

Myth 3: You need to carry a balance to improve your score.

Truth: Try to pay off your full debt and make the pending balance zero.

 

How Long Does It Take to See Results?

There is no fixed time for fixing this issue. It may span from month to year depending on the credit activity and condition of your account. If your score is between 400-500, it takes less time to improve but if it is 200 or 100, it takes time to settle down. So keep the monitoring on and improvement plans should be followed continuously.

 

Final Thoughts: Why It Pays to Prioritize Your Credit Score

Don’t consider credit score just a number because it can bring peace in good conditions and depression in bad conditions. So you have to take it seriously and make an improvement plan.

Take Action Today!
Don’t waste too much of your time just thinking that I will do this and that for improvement. Instead immediately, set the small goals and then move on to climb up and up in the success run. One day you will find the fruit of it.

 

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$
LOANS RANGE FROM $5,000 TO $250,000

PAYMENT FREQUENCY

% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% AND 23.00%.

48 MONTHS

12 MONTHS 84 MONTHS

CALCULATE
$

PAYMENT FREQUENCY

% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% AND 23.00%.

48 MONTHS

12 MONTHS 84 MONTHS

CALCULATE

*Our fixed interest rates vary between 9.95% and 23.00%, and the rates you receive will depend on your individual circumstances. There is a loan establishment fee starting at $510, a PPSR fee from $7.39, and a monthly administration fee from $2.17. Approval for financing is subject to Kiwi Car Loans' Terms and Conditions, lending criteria, and responsible lending standards.

COMPARE INTEREST RATES & LOAN TERM & REPAYMENTS
COMPARE RESULT WITH A DIFFERENT:
INTEREST RATES LOAN TERM LOAN AMOUNT REPAYMENTS
% p.a.

OUR INTEREST RATES VARY BETWEEN 9.95% and 23.00%

MONTHS

OUR LOAN TERM VARIES BETWEEN 12 MONTHS AND 84 MONTHS

$

LOANS RANGE FROM $5,000 TO $250,000

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LOANS RANGE FROM $5,000 TO $250,000

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Interest rate
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Monthly administration fee
From $2.17
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Loan establishment fee
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Personal property securities register fee
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From $7.39
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