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Eight things you need to know about your credit record

Don't ruin your credit record. Image: Getty

It can be financial suicide to ruin your credit record. That's because even one black mark on your credit record could make your life more difficult when it comes to borrowing money, getting a credit card, renting property and even landing a job interview.

Credit record basics

1. What's a credit record?
Whenever you do things like buying on hire-purchase, getting an electricity account or going guarantor for someone else the lender will check your credit record, which is held by Veda Advantage to help decide if you're safe to lend money to. Every time a credit check is done on you a note of that search is added to your file. Repeated searches don't look good on your credit record, and nor do defaults, which show up as well. Your record alone doesn't determine whether or not you'll get a loan or hire-purchase. Every lender has its own method of credit scoring, which may also include your account behaviour in the past.

2. What if I've defaulted?
Defaulting on debts doesn't look good and a $20 default can be as damaging as a large one on your file. If you can show a lender that you've worked to clear the debt, the likelihood is you'll be given a second chance. But if it's still outstanding years after the event, forget that loan.

3. Check your credit file
Checking your credit record is free and easy. About 10,000 Kiwis check their records each year. To check yours, go to the My Credit File website and follow the instructions. It's a good idea to check your file every couple of years to protect against identify theft. If people other than you have been applying for credit in your name it will show up.

4. Watch out for your ex
If you buy goods on hire-purchase or open a utilities account together with someone else and later split, you're still responsible for payment and will get a black mark on your credit record if your partner or ex-partner doesn't pay up. Going guarantor for them is just as dangerous and doesn't go away once you've split.

5. Renting a property
Landlords can access your credit file before offering you a rental property as well as load default information. In times of rental property shortages, having an impaired credit record can be very damaging. It's worth remembering that you address history is also held for life.

6. Getting a job
Some employers and employment agencies check credit records for every single candidate. That can mean the difference between getting the interview or not. It might sound unfair, but some companies, especially in the financial sector, have rules barring anyone with an impaired credit record being employed. In other industries these black marks may exclude you from getting a job that comes with a company credit card.

7. How to clean up your credit record
Time heals a bad credit record. After five years, your court judgments, payment defaults and overdue account information is wiped off. It takes seven years for bankruptcy notices and credit applications to be removed. Even if you default on a payment but repay it later you'll have to wait five years before the slate is wiped clean.

8. Mistakes on your file
Mistakes can crop up on credit records. Thankfully there is a procedure for correcting mistakes in a credit record. This can be done by writing to Veda Advantage to have your record corrected if there has been fraud or other errors. You'll need pretty good proof, such as a police report about fraudulent use of your identity details, before Veda Advantage will consider making a change.

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User comments
NOT FREE to check your credit.. Please don't lie.
I read this and i really appreciate this quality content this content about Money Expert. This is Very helpful infomation to know about what the proceedures are. john
Very helpful infomation to know about what the proceedures are.

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