Why did my credit score change?
Due to the amount of information that is used to calculate your credit score, it’s easy to see how your score can fluctuate. Still, if you don’t believe much has altered in your financial habits and your credit score still has changed, it can be confusing. Here are a few common reasons why credit scores change:
You applied for a new loan or credit card
Any new applications you make for credit will directly affect your credit score. Keep in mind that you don’t need to be approved for the application for it to be listed on your credit file and therefore affect your credit.
A listing on your credit file expired
Information is only held on your credit file for a certain length of time, so when a listing is removed from your credit file this will positively impact your credit score.
You changed your credit limit
Increasing limits on your credit cards or applying for a personal loan top-up (which usually constitutes a new personal loan application) will usually negatively impact your credit score. Similarly, decreasing your credit limit can positively impact your credit score. In both cases, your new credit limit will also be listed on your credit file.
A credit provider reported new information to a credit bureau
Credit providers don’t always immediately report information to credit reporting bureaus, so you may find your credit score change at a seemingly random time. This newly reported information, which can include default information or even credit enquiries, can be the cause.
Comprehensive data was added to your report
Six years ago, a new comprehensive credit reporting (CCR) system was introduced in New Zealand. The upshot is that organisations are now allowed to share far more of your information with each other.
You closed a loan or credit card
Your credit score may improve if you close a loan or credit card. Only credit limits are listed on your credit file, not the current debts on your accounts.
You made a repayment on a credit account late
Your monthly repayment information is now listed on your credit file and can directly affect your credit score. If you don’t make a repayment on time it will cause your credit score to drop, but if you have a low credit score, making monthly repayments on time can have a positive impact on your credit score.
