Kiwis need to look beyond their credit score


AUCKLAND – November 22nd, 2019: Misconceptions around credit scores may be affecting the financial wellbeing of Kiwis according to the head of one of New Zealand’s largest credit bureaus. Equifax New Zealand Managing Director Angus Luffman says whilst more consumers are becoming familiar with the concept of a credit score, many remain unaware that it’s only a small part of the information lenders use to make decisions.

Speaking on The AM show yesterday, Luffman is encouraging New Zealanders to look beyond a credit score which is only a snapshot of your risk profile at any one time. “Kiwis need to shift their focus to their credit file which includes more comprehensive information such as applications for credit, accounts, recent repayment history and defaults.”

A credit file is usually created the first time you apply for credit, default on a payment or where public record information is created about you. When you approach a lender or supplier such as a bank or utility company, they usually ask for your details such as your name, address and date of birth, as well as your consent to a credit check. They then lodge an inquiry with Equifax and receive a copy of your credit file before making a decision.

“Becoming familiar with that file means you can identify any financial behaviour that could be impacting on your ability to borrow. For example, many people aren’t aware that their credit file includes positive information such as 24 months of repayment history across all accounts. If you’re consistently making late payments on anything from credit cards to electricity, that can negatively affect your score and possibly any applications for credit.

Likewise, if you’re making repayments on time, lenders can see that positive behaviour and reward it accordingly. Lenders are able to provide positive information which enables a more balanced view of an individual’s credit history. “That’s been good for all New Zealanders,” says Luffman. “It means that an isolated default or non-payment on an individual’s credit history doesn’t automatically disqualify them from borrowing. Instead, that default could be offset by an exemplary repayment history across other accounts.”

Credit providers also look at additional information such as the amount of debt you can reasonably manage, given your income and your employment history. That means that some people with a low credit score may still qualify for credit and some with a high credit score may be declined.

“Whilst New Zealand is still very much in its infancy when it comes to familiarity with credit files and scores, it’s really important to educate yourself if you want to make smart decisions,” says Luffman. And if you’re wondering why you should care – then consider this example: the difference in total interest repayments on a $20,000 car loan over a five-year period, at a seven percent interest rate and an 11 percent interest rate, is around $2,330.  Securing the lower interest rate will to a large degree depend on your credit history.

Get a free copy of your credit file at