Understanding Credit Score for Car Loans
Tuesday, 15 June 2021
Do you know that your credit score is among the many elements that influence your borrowing power? Well, it also impacts the lender’s decision on your vehicle loan application. That’s why you need to know your credit score before shopping for vehicle finance.
By understanding your credit score in NZ, you’ll know whether to pause and build a positive credit or carry on with your loan application. Let’s get into it deeper!
What’s a Credit Score?
It’s a range of numbers that lenders use to define or measure a borrower’s creditworthiness. The credit score falls between 0 and 1000. With several scoring models, expect varied results. However, with us, Kiwi Car Loans, what matters most during your car finance NZ evaluation is your credit rating range and the information attached, not the exact score.
Your preferred scoring platform will describe your credit score upon evaluating key determining factors like your credit history age, total debts owed, payment history, credit check inquiries and current credit accounts. All this information showcases your credit score position, which can either be good, bad or no credit.
What’s Your Credit Score NZ Made of?
The factors mentioned in your credit report are expressed as a percentage to know your exact credit range and the possibility of repaying the loan. The percentages include:
- Repayment history – takes 35% of your credit score
- Total debts – accounts for 30%
- Length of your credit history – amounts to 14%
- Credits used – total allocation of 10%
- New credits – carries a total of 10%
Regardless of the credit scoring bureau used (more on this, next), all these five components will help establish your credit score. Based on the range, the lender will decide to approve your auto loan application or not.
Checking Your Credit Score
There are many sources to check your credit score, but the most common credit score reporting agencies in New Zealand that continues to get preference up to date include Equifax, Illion and Centrix. Log in to these sites or browse the Kiwi Car Loans website and request your credit report.
Depending on the credit reporting bureau that your lender prefers to establish your eligibility or credit risk for a vehicle loan NZ, the credit ratings slightly vary—because of the difference in category description ranges.
So what’s the standard credit score range in New Zealand?
The NZ credit score ranges from 0 to 1000 (for Illion and Centrix) but extends to 1200 when using Equifax. Based on the numbers, it can be low, fair, average, very good, or excellent. For instance, Illion and Centrix define any score from 700 to 1000 as good credit.
Now, Which Is the Best Credit Score for a Vehicle or Car Loan?
Despite your credit rating, you can qualify for car loan finance NZ, but a credit score of 700 and above will land you favourable loan terms. For instance, at Kiwi Car Loans, we position you for:
- Fast loan approval
- Loan disbursement without a down payment
- Lower interest rates
- 100% online car loan or vehicle loan financing
It’s always wise to keep your credit score in a good rating since most lenders don’t take the risk of financing borrowers with bad credit.
Don’t Overthink Your Credit Score
You’ve probably checked your credit score and not sure whether to submit your car loan application? At Kiwi Car Loans, we don’t base your loan approval on a specific score. Instead, we consider the general health of your credit history to find easy and fast auto financing deals that suit your situation. Talk to us today on 0800 008 888 or APPLY NOW!
If you enjoyed this article, check out out Car Buyers Guide.