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How to kill your credit rating — in six simple steps

Don't kill your credit rating
Having a squeaky clean credit rating is very useful in life. It'll help you next time you really need to borrow some money.

Every time you want credit, your "record", which is held by private company, Veda Advantage, is checked and if you look like a bad risk, you could have trouble getting anyone to lend money to you or take you on as a customer.

If you want to buy something on hire purchase, get a credit card, or even open a utilities account you'll have a much easier time if your credit record is "clean". That means that you have no defaults on your credit record.

Believe it or not, employers and potential landlords can and do check people's credit ratings. If, for example, you'll need to handle cash or even a company credit card in for new job, a black mark on your credit record could be death for your job chances.

Here are six ways to kill your credit rating:

1. Applying for credit too often. Every time you apply for credit, a footprint is left on your credit rating. You might not even realise you're applying for credit. For example, every time you open a new utilities account with a power or phone company, your credit record is searched.

2. Failing to pay. If you fail to pay everything from a hire-purchase to your water bill, you could have the default recorded on your credit record for all to see. Needless to say, defaults don't look good when you next need money.

3. Being a bad tenant. Landlords check prospective tenants' credit records — or at least the good ones do. So if you're moving from flat to flat, it will soon become mighty obvious on your credit record. If you're a bad tenant and are turned down over and over again, then that will show too. You'd be surprised what landlords read into credit records.

4. No asset procedure (NAP). NAP is a type of bankruptcy for people who owe less than $40,000, but can't repay their debts. It's a good alternative because it is discharged after one year, meaning you can apply for credit again, and is wiped off after four years. Even so, it's going to make it darned difficult to do everything from opening a bank account to getting a mobile phone.

5. Going guarantor is a great way to ruin your credit record. Your brother, sister, flatmate, or member of the whanau, wants to buy anything on credit they may be asked for a guarantor. Being that guarantor may seem simple. All you need to do is sign a piece of paper. The trouble is that if aunty or anyone falls behind with payments, you're then responsible for them. This is a hugely difficult problem in New Zealand where cultural responsibilities mean that many people are expected to back up their family in this way.

6. Don't pay your taxes. Currently taxpayers have confidentiality. But under new proposals the Inland Revenue Department may start reporting non-payments to Veda Advantage from next year.

Finally, debt figures in New Zealand make grim reading. Debt collection agency Baycorp has seen an increase in unpaid debt ranging from mortgages through to library fines in the past couple of years.

The dollar value of debts being recovered by Baycorp (which has nearly half of the debt collection business in New Zealand), has also steadily risen since the recession hit. If you're at risk of blighting your credit record, or defaulting, click on some of the links below for some tips on how to keep control of your finances.

Related links
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User comments
Was borrowing $2000 back in 2009 from Jade finance and still have my regular payment, wishing this could be fully paid soon, I just found out they lodged this debt in Veda- when I recently applied for first Home loan, without a notice or a single contact to me, I have been seriously robbed, still trying to figured out why they done this, with no records of overdue or so but the statement i asked to sent out arrived with $3500 owing. OMG!! I am shocked and depress about this. They have been eaten my life away and my dream is shattered
best thing i ever did, i had a massive amount debt from credit cards couldnt pay it , due to getting sad and losing my job , i have no regretts about it at all.
Otherwise your flatmate who is in charge of actually paying them might not do so - and you have the bad credit rating as a result. Like mine. Having a bad credit rating also stops you from opening some bank accounts, even if you aren't even borrowing money. Can definitely attest to Baycorp NOT removing falsely lodged bad credit. Got stung when Genesis Energy falsely lodged a claim for bills not paid. The problem with that was that I didn't have an account with them at the time!. The electricity account for my old flat continued to be charged against my name, with new flatmates in the place, even after their technician came round in person and signed off my own account as closed - right in front of me! This got lodged with Baycorp and after 6 months I managed to get Baycorp to remove but had to send about a billion faxes to them and phonecalls each detailing how Genesis had billed me for an account that wasn't even in existence!
Having worked in the credit reporting industry I can verify Joe's comment they are certainly not squeaky clean themselves. When incorrect information is loaded it can be almost impossible to get it corrected, while those who know how to play the system can have a bad credit history but still come out squeaky clean in a report. you just have to hope you never have to borrow money, or take your chances.
One thing they fail to raise in this article is - you will struggle to get credit or given finance if you have no history of ever having any finance, at all, in the past. Bit of a mis-noma but its true. Clean doesnt always mean clean. Even if your 'well off' and have paid up front etc in the past and are currently cashed up but want to take advantage of an interest free deal for example, you may well get turned down for having no credit history whatsoever. Doesnt make you a risk.
How do you get money back from Baycorp? They arn't squeeky clean either

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