The inside word on credit check ups and a healthy score

Good, bad or downright ugly, everyone who has ever applied for credit, has a credit score. That magic little number that can have a massive impact on your life. A rating out of 1,000 that gives employers, lenders, landlords, insurance providers and other powers that be a way to measure how responsible you are with money before trusting you with theirs.

As important as this number might be, many of us have no idea what our credit score is and how our choices from a young age can affect our financial options well into the future. To get you up to speed, we’ve pulled together the need-to-knows about credit scores and a few tips to get yours looking healthy.

How to check your credit score

Though our credit score is a reflection of our personal finances, it’s not held by the individual. Credit reporting companies provide this information to those who seek it, however, lenders, landlords, employers and insurance providers will need to get your permission first.

A number above 700 is considered good. To get your approximate score, check for free with Credit Simple or for full details of your credit history, get a free copy of your credit report from one of three main companies – Centrix, Illion or Equifax. It can often take up to ten working days for them to process your request, so keep that in mind for tight turnarounds.

Checking for errors

When looking over your credit report, look for anything out of the ordinary such as purchases you don’t recognise or penalties you don’t recall. If one company has it wrong, chances are all three will and this could be affecting your financial future. It could be a simple mistake or a case of identity theft – either way, alert all credit reporting companies to the error. If they won’t act, send a complaint to the Privacy Commissioner quick smart.

How to improve your score

Make sure you make all payments on time: Whether it’s your monthly water bill or a loan repayment, companies don’t care that your cat needs an eye-test. Show them the money on time.

Don’t default on payments: A default is where a payment over $125 is overdue by more than thirty days and the lender has tried to recover the money. This stays on your credit record even if you repay the amount in full.

Don’t share bills: When it comes to flatmates, it’s better to be safe than sorry. Don’t put your name on the bill unless you’re the one responsible, as their actions can affect your individual score and your buddy Mike may take more just than your good shampoo.

Limit credit applications: Every time a lender checks your record, this negatively impacts your score. Only apply for what you really need. Applying for multiple sources of credit in a short space of time can also turn off lenders.

Avoid payday loans and quick finance: With their high interest rates, these types of loans are viewed as a last resort. Seeing these on your credit history can make lenders think you’re no good with money.

Cancel unused credit cards and accounts: Multiple sources of credit don’t look good on your history. If it’s just bulking up your wallet, cancel it.

Credit transfers, debt collections and hardship applications are not a good look, while having no credit history is nearly as bad as poor credit.

Most information stays on your credit history for lenders and organisations to see for four-to-five years, including default payments, bankruptcy and hardship. Missed payments only stick around for two years, while multiple bankruptcies are kept indefinitely.

Final note

If you’re looking to take out a car loan, check your credit score then chat to your local car dealer about your vehicle lending options or click here for more information about vehicle loans from Marac.

Marac is a division of Heartland Bank. Responsible lending criteria, terms, fees and conditions apply.