A credit file is kept for any person who has been credit-active - that is, has borrowed money (for a credit card, mortgage, car etc) – over the past seven years. Your credit file is updated every time you apply for new credit. This credit history impacts on whether or not a credit provider will approve your loan; how much importance is placed on it will depend on the lender.

What’s on a credit file?

Your credit file contains information about you and your credit activity over the past seven years, including:

• Personal details such as name, residential addresses, date of birth, drivers licence number and current or previous employer
  
• Credit applications and enquiries you have made during the past five years
  
• Records of some current credit accounts
  
• Overdue accounts (defaults) which have been listed against your name, including an indicator on whether the default amount has been paid or not
  
• Bankruptcy information
  
• Default judgements
  
• Public record information
  

How can I get a copy of my credit file?

If you are applying for a home or business loan, it is a good idea to get a copy of your credit file prior to applying for a loan. You apply for your credit profile online at http://mycreditfile.co.nz/ for minimal costs. Obtaining a copy of your credit information file will assist you in understanding, assessing and managing your own credit-worthiness.

Tips for maintaining credit-worthiness

• Pay bills on time. An overdue account is usually a debt that has been owing for a minimum of 60 days. Unpaid accounts will remain on the database for seven years.
  
• Call your credit provider(s) in a timely manner and alert them if there is a problem meeting your commitments.
  
• Review your credit file to make sure there are no errors in the information and/or discover any overdue accounts that have been forgotten about.
  
• Monitor your credit file to ensure someone is not fraudulently using your identity.
  
• Limit credit applications to necessary situations only. Each new application is recorded on your credit file and too many applications, even for loan pre-approval, can be an issue for some lenders.
  
• Remember that the details of all overdue accounts, even when paid, remain on your file for seven years from the date of listing.
  

What do I do if I have past credit issues or a bad credit history?

In New Zealand, even if you have a negative credit history, you may still be able to secure a competitive home loan. Make sure you are aware of all your options, starting with the following information:

• Inform your mortgage adviser and lender at the outset of any problems in your credit history. Your mortgage adviser will show you loan products that take your situation into account.
  
• Explain each problem, why it occurred and how you rectified it.
  
• Negative responses to credit applications do not necessarily mean your credit file is flawed. Credit providers each have their own lending criteria, so seek an explanation.
  
• Investigate securing your loan through a non-conforming lender. They consider applications from people with past credit issues. However, you will need to prove you are now in a position to support the loan.