6 Steps To Improve Your Credit Score In NZ

Unity’s tips to help you get the money you need, for the things you want.

Posted September 2023

Your credit score is an important factor that lenders, banks, and other financial institutions (such as credit unions, like Unity) consider when determining whether you may be accepted for a home loan, personal loan, rental property, or even employment.

At Unity, your credit score helps us understand if you can afford to repay a loan, so you’re not put under any unnecessary financial pressure.

What Is A Credit Score?

To assess your credit score, your “credit rating” will be a number between 0 and 1000. The higher the number, the better your chances of getting a personal loan, home loan or even a rental property. A strong credit score rating shows you have a history of paying bills or loan repayments on time and are more likely to be a responsible borrower. A low credit score rating can make it challenging to borrow money and may lead to higher interest rates. You’ll want to make sure you know your score and check it often.

To help build your credit score in Aotearoa, start with some of these steps.

1. Check Your Credit Score Report – For Free!

Start by checking your credit score report to understand your current credit situation. You can do this today, by downloading the free Yonda mobile app for an instant credit score report (and tips on how to improve it!) You can download the Yonda app here.

If mobile apps aren’t for you, you can apply for a free credit score check, or copy of your credit report, from one of New Zealand's three main credit reporting agencies through the links below:

You can then review your report for errors or anything that doesn’t look right to you. Sometimes, it can be a simple misunderstanding, or more often an unpaid bill that is affecting your score. If you do find an error, contact the credit reporting agency to correct anything that might be a mistake.

2. Monitor Your Credit Score Regularly

Regularly monitoring your credit score can help you identify any changes or discrepancies and take corrective action. Helpful hint: set up a reminder every 6 months to track any changes to your score.

3. Make Your Payments On Time

One of the most important things that could affect your credit score is your payment history. Make sure to pay your bills (such as phone, internet, power, or rent) and any debts (such as AfterPay, car loans, or personal loans) on time and in full.

Late or missed payments can negatively impact your credit score. A useful trick is to set up automatic payments to ensure you never miss a payment date. Just ask the Unity team how you can set these up in internet banking here. And be sure to have enough funds in your account to pay them when they are due.

4. Keep Your Use Of Credit Low

“Credit utilisation” is the amount of credit you're currently using versus the potential amount of credit available to you. This relates to credit such as AfterPay, overdrafts, credit cards and more.

It's important to keep this low by not borrowing to the maximum of your capacity, as high credit utilisation can negatively affect your credit score.

Some tips for keeping your credit utilisation low are:

Paying off your credit card balances in full each month.
If you can't pay off your balances in full, make at least the minimum payment each month.
Don't max out your credit cards. If you do, your credit utilisation will be high

5. Think About Secured Credit Products.

A secured loan means you provide collateral, such as a registered car, motorcycle, motorhome or boat, which the lender can use to recover the debt if you don't repay it. Secured loans are often easier to gain approval for and can help you establish a positive credit score. Great news, too; they often have a lower interest rate than unsecured loans, so you’ll pay less interest. Nice!

6. If You’ve Got Questions. Talk To Us.

At Unity, we take the time to walk you through the options. If you don't understand what’s in front of you, ask our team; they will be happy to spend the time to support you. Our research says 42%* of Kiwis are either very concerned or quite concerned about their ability to meet their financial needs, so you’re not alone.

By following these tips and strategies, you, too, could establish a good credit score and increase your chances of being approved for credit in the future.

Have A Lot Of Debt?

How can you make them easier to manage? How could consolidating debt you get more cashflow? If you have a few different loans (such as a car loan or store cards), what should you pay off first? Unity answers common questions to help you manage debt in the video below:

*Perceptive research 2023

Still want to know more? You may find the answer on one of the pages below:

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