How credit reports and scores work

What’s on my credit report?

What are credit reports? A credit report includes any payment defaults recorded against your name. A default is where a payment has been overdue for more than 30 days, and the lender has taken steps to recover the outstanding amount.

A default can stay on your credit record for five years, even after you have paid the amount in full.

A credit file can also show how much you’ve borrowed and whether you are making regular repayments (such as credit card, hire purchase, car finance and mortgage repayments) on time. Payment of power and phone bills may also be included in your file. So the more repayments you make on time, the cleaner your credit report is. 

How do I check my credit rating?

Everyone has a legal right to request information held about us by a credit reporter – at no cost. 

It's free to check your credit rating. Although if you want the information quickly (within five working days) you may be required to pay a fee. To order a credit report, contact the credit reporters directly. The following credit reporters operate in New Zealand:

• Centrix
• Equifax
• illion

To correct or freeze information on a credit report, make sure to contact all three. For a fee, some credit reporters, such as Equifax, will load a monitor on your credit file to alert you to applications for credit made using your identity. Find out more about rights on the Privacy Commissioner's website.

It’s a good idea to regularly check your credit report, especially if you're thinking about borrowing in the near future.

Who checks my credit history?

Lenders usually check your credit history whenever you apply for credit – whether it’s a mortgage, a personal loan, hire purchase, car finance or a new credit card. Phone and power companies may also check your credit rating if you apply for those services on credit. A prospective landlord or insurer might check your credit history. Some employers even make credit checks on job applicants.

They do this by making an enquiry to a credit reporter – an organisation that collects credit information and sells reports on an individual’s credit history to businesses.

Something to keep in mind is that having lots of checks run on your credit history can make it look like you’re taking on a lot of debt. For example, say you’re shopping around for a car. You visit five dealers, who all take your licence and do a credit check. Having so many credit checks done in a short period of time can lead to lenders turning you down. 

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