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Your Credit Check

October 22nd, 2013 -

Your credit score is one of the most important assets you have. It is based on your credit history – your borrowing “resume” or “track record”.

If a stranger came up to you and asked if you could lend them some money, you probably would be somewhat hesitant. Yet, every day, financial institutions face this situation. People they have never met before borrow money by way of personal loans, credit cards, and mortgages. Since these people are not known to them, the lender must rely on the borrower’s credit history – the record that shows whether they have repaid previous debts on time.

Whenever you apply for a credit card, car loan, mobile phone contract, or mortgage, the credit provider calls a credit reporting company to check your credit information. That file grows each time you apply for any type of credit. This information stays in your credit file, and it is one of the things banks will look at to decide whether or not to do business with you.

It is important to know what credit providers consider when assessing your application for a loan, so you understand what you can do to improve your chances of a successful application.

Credit scores collate information contained in existing credit reports, including how many times people have sought credit, and if they have defaulted on debts or been bankrupted.

A new credit score has recently been introduced in New Zealand. According to the new system, a person with a score of 150 or below would find it difficult to obtain credit from a bank or finance company. The average score would be between 500 to 600, and a person with a score of 700 would generally be a good credit risk.

How can I improve my Credit Score?

A poor score could be improved by paying outstanding loans, not defaulting on debts and avoiding bankruptcy. An average score could improve through personal and financial stability, consolidating debt and only applying for credit when it was needed. A good score is based on maintaining a solid financial position, borrowing from reputable lenders and paying debts.

At NZCU we are committed to helping you manage your money in the best way possible. Call in today to see how we can assist you.

 

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