Why Kiwis should learn to love their credit score.

1min read
Posted 09 December 21

Have you heard the term ‘credit score’ but are unsure what it means? What’s so great about having credit anyway isn’t debt the enemy? You’ve worked hard to save money, avoid credit card debt and put money away for the future, so should you even care about credit scores?

Credit scores and your credit history are important indicators of whether you’re a safe bet when it comes to lending money. Whilst you might not need it now, building a credit history is critical if you want to buy a house or purchase anything on credit. That’s why all Kiwis should learn to love their credit score and check it regularly.

Still not convinced? Maybe if we explain it a little further...


So, a credit score is what exactly?

Scores are a number that indicates how good you are at repaying debt. For example, if you’ve financed a car and made regular repayments on time, your credit score will reflect that. If you have more than one type of finance or a personal loan and credit card debt, your credit score will reflect your behaviour across all those accounts.


Ok. Then what’s a credit file?

Your credit file is different to your credit score. It’s a file that contains all the information about what loans or finance you have, whether you’ve met the repayment terms or if you have any defaults (bills that you haven’t paid). Taken together, this forms a history of all your details of all your repayments, or lack of repayments, over 24 months. A credit file is more detailed than a credit score and can be used as part of your credit application.


You should love your credit score because…

It will help you borrow money for essential things like a car, a home, or a holiday. Knowing your credit score and checking it a few times each year means you’ll be able to see how creditworthy you are. It’s also an essential part of being financially fit and responsible.


You should love your credit file because…

It tells you everything about how you manage credit. Whether it’s the amount you have borrowed or late payments on your credit card, your credit file provides a great snapshot of how well you manage debt and whether you’re struggling. It can also help you improve your credit score by identifying any repayments you may have missed.


A credit score can be used when…

Lenders only need a quick indication of whether you’re a safe bet. For example, you may be upgrading your phone and already have a repayment history with the company. Their records may show that you’ve made all your previous repayments on time, and with a good credit score, that’s likely to be enough to seal the deal.


A credit file can be used when….

Any lender needs more information to approve any credit. For example, you may be applying for car finance but have no history with the company that provides the loan. They’ll likely want you to consent to a credit check to ensure that you’re able to repay the loan and that they’re lending responsibly.


In short

Whilst there are no hard and fast rules around when lenders use credit scores and credit files, your credit information is private and can only be accessed with your consent.  We’d recommend investing some time a few times each year to check in on your credit health by requesting your credit file and your credit score. Together with sound budgeting and financial planning, you’ll be on track for a financially fit future.




Info and tools on the Yonda website are used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.