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Whether you’re applying for a mortgage, seeking a personal loan, or even renting a property, your credit score plays a crucial role. It reflects your creditworthiness and financial reputation, providing lenders and financial institutions with an indication of your ability to manage debt responsibly.
Join us as we strive to empower readers with the knowledge to navigate credit-related matters effectively.
What is a good FICO score in NZ?
A good credit score indicates that you have demonstrated responsible credit behaviour. However, the rating ranges can vary depending on the credit bureaus’ scoring models, typically on a scale of 1,000 (1,200 at Equifax). In New Zealand, a good FICO score is 700 or above.
Within the credit scoring range, FICO charts serve as helpful guides for lenders, indicating where your credit score may fall within a specific category.
However, when applying for new credit, the exact cut-off point used by lenders still needs to be discovered. The credit score required to obtain a credit card can vary based on the credit bureau from which the issuer obtains your credit information.
What does credit score matter in NZ?
Credit Score! You must have heard this word many times because it affects many parts of your personal and financial life.
Good Credit Score Benefits in New Zealand
1️⃣ Increase the possibility of high approval rates for new credit:
If you have a high credit score, the risk for the lender is reduced. Your good credit standing indicates to the lender a greater possibility of recovering their money. Consequently, you are more likely to be approved for new credit or loans.
2️⃣ Secure the best credit card deal with enhanced rewards:
You may have had a credit card for many years, which can benefit your credit history. However, you may still need to take advantage of numerous other advantages. Maintaining a solid credit history allows you to qualify for the best credit cards available.
With a credit score above 700, you can access various rewards and cashback perks, such as complimentary airport lounge access, free hotel breakfasts, or cashback on airline miles. A no-interest credit card can also serve as a temporary emergency fund when needed.
3️⃣ Gain eligibility for lower interest rates:
Consumer Protection NZ states that a good credit score determines your interest rate. Credit card companies and lenders are more likely to offer favourable deals when you have an excellent or good credit score. Furthermore, a good credit score can qualify you for refinancing at a better interest rate if you already have an existing loan.
4️⃣ Unlock the potential for a higher credit limit:
A good credit score also plays a vital role in upgrading your credit card. If you already have a credit card and your credit score has recently moved into a good rating, you can ask the issuer to increase your credit limit.
Alternatively, if you don’t require a higher limit, you can request a reduction in the current interest rate. A good credit score also enables you to qualify for more significant loan amounts, as it signals to lenders that you are a reliable credit risk.
5️⃣ Expand your access to quality housing options:
Finding a suitable home can significantly enhance your quality of life. Lenders, landlords or landowners may check your past payment history when considering renting an apartment. Maintaining a positive payment record increases your chances of securing your dream apartment. However, if you have bad credit, you may need to offer extra security deposits or add a co-signers to help with the lease agreement.
6️⃣ Enjoy convenient access to utility services:
Having a better credit score simplifies the process of obtaining utility services. When creating accounts for electricity or internet services, utility companies often consider your credit history. A good credit score eliminates the need for a security deposit or a co-signer who guarantees payment of your bills.
7️⃣ Create a favourable impression in front of potential employers:
Although obtaining employment in New Zealand with a poor credit score is still possible, reputable companies may check your credit report to assess your financial responsibility. Employers may regard late payments and bankruptcy as warning signs or red flags.
8️⃣ Unlock better rates for motor and home insurance:
Maintaining a credit score of around 700 or above can lead to more affordable insurance premiums. However, having a score of around 500 or less may result in higher premiums or even outright refusal from insurers. According to Credit Simple CEO David Scognamiglio, insurers consider your credit score and other factors to determine your car insurance premiums.”
How to maintain your credit score in New Zealand?
Some proven ways to maintain your credit score in New Zealand:
- Regularly monitor your credit scores.
- Familiarize yourself with the significant factors that affect a specific credit score.
- Review your credit report carefully for any inaccuracies.
- Get an idea of how often you can access your credit reports.
- Find out the essential mistakes you should avoid when using a credit card.
- Ensure timely payments and maintain low credit card balances for best credit management.
- Be careful about shortcuts or quick fixes to improve your credit score.
Getting a loan with bad credit with Sprint Finance
As mentioned above that if you want to unlock new financial opportunities, you must have a good credit score. If your credit history is good, lenders will work with you on the best loan deals at lower interest rates.
However, if you need better or no credit, payday loans NZ at Sprint Finance might be an option. These short-term loans are usually approved based on your ability to repay your loan. It means that even with bad credit, you may still be able to borrow money.
