If you’ve ever wondered what your credit report looks like, wonder no more. This guide will give you insight into your credit report, including what information it contains, how to read it, and why it’s so important.

There are three main credit reporting bureaus in Australia, and you can access their version of your report in a number of ways, including in a written/physical format or through an online dashboard.

Each variation may differ slightly in the way it’s presented, but the bulk of the information will be the similar. For this guide, we’ll be using the convenient (and free!) Credit Simple online credit report dashboard to explain what your credit report contains.

Credit Simple gets its data from the credit reporting bureau illion.

Your credit score

When you first login to Credit Simple, you will see your credit score. This is a reflection of your credit-worthiness boiled down from a heap of lending data into a simple number.

Your credit score and score trend

illion scores range from 0 – 1,000 and the higher the score, the more creditworthy you’re determined to be.

Here’s how the scores break down:

• Score of 0. This is the lowest score you can get and means you’re the riskiest kind of borrower. People with a score of zero either don’t have a credit history at all or have experienced a very negative credit event like bankruptcy.
• 1-499. You have a below-average score and are considered very risky to lend to.
• 500-699. You have an average score and with a few small changes to your borrowing behaviour, you could easily improve your score.
• 700-799. You have a good score and lenders are likely to give you favourable treatment. However, you may want to limit the number of applications you make, as this is what is likely keeping you from having an excellent score.
• 800-1000. You have an excellent credit rating and are considered the least risky to lend to. This puts you in a great negotiating position with lenders.

Your credit history

Your credit score isn’t a magic number that is pulled out of thin air. It is the result of a calculation that incorporates heaps of data around your borrowing habits. The data that your credit score pulls from is called your credit history.

Credit Simple also provides your credit history, broken down into the following categories:

• Personal information. Your name, date of birth, address and previous address.
• Accounts. The accounts you have open including mortgages, credit cards, utility accounts and even equipment hire. It also includes details like the amount you owe and a complete breakdown of your payment history.
• Enquiries. The times you’ve authorised a lender or a utility to do a hard enquiry into your credit history (a hard enquiry is an official inquiry related to an application for a loan). Looking at your own credit history (soft enquiry) won’t decrease your score, but too many hard enquiries can lead to a small deduction.
• Authorised agent enquiries. The times you’ve allowed an authorised agent, such as a mortgage broker or a car dealer, to do a credit enquiry on your behalf.
• Defaults. Any payments that are at least 60 days overdue (or were at least 60 days overdue at the time of payment).
• Serious credit infringements. Situations where a lender believes you fraudulently tried to obtain credit or tried to fraudulently avoid your credit obligations.
• Judgements and Summons. Publicly available court records pertaining to your debts.
• Personal insolvency. Publicly available data from the Australian Financial Security Authority related to bankruptcy.
• Other public record information. Other publicly available information that may be useful to potential creditors when determining your creditworthiness.
• Company directorships. Publicly available information from the Australian Securities and Investment Commission about any previous or current directorships you’ve held in any company.
• File notes. Notes placed on your credit history (at your request) explaining or disputing the circumstances surrounding information on your report.

Here’s what it looks like in the tool:

The categories of reporting in your credit report.

You can expand each section to see much more detail about each. Here we are looking at payment history of a specific account listed in the accounts section:

A detailed repayment history for an example account

What can you do with this information?

As you can see, a credit report is quite straightforward although it can contain quite a bit of information. The good thing about a tool like Credit Simple is that it allows you to have all of this information at your fingertips and dig through it systematically.

Going through your report with a fine-tooth comb can help you in a number of ways. You can:

• Identify areas where you could improve. If you see that late payments are hurting your score more than you thought they were, it’s likely to propel you to make changes.
• Identify errors in your report. If you see something reported that you dispute, you can bring this up with the lender or the credit bureau. Credit Simple lets you lodge a dispute right through the tool.
• Negotiate better terms. If you see that you have a good score, you can have more confidence in negotiating with your lender for better terms like lower interest rates and reduced fees.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Here’s what a credit report actually looks like appeared first on Credit Simple NZ.

The post How to find the best home loan for your needs appeared first on Credit Simple NZ.

Online home loan calculators can be among the most valuable tools you’ll find as you seek to maximise your borrowing capacity, nab the best deal and work out the most cost effective way to pay the darn thing off. 

What is a home loan calculator?

“Home loan calculator” is actually a catch-all term that applies to an entire category of calculators that each has its own function. 

For example, one type of calculator will estimate how much you can borrow, while another will let you experiment with different payment strategies. There are even calculators that will help you estimate your stamp duty based on where you plan to buy your home. 

Some require more input from you than others, so you’ll need to know what to expect from each one before jumping in.

With that in mind, here are the most popular types of home loan calculators you’ll find on the net. Keep in mind that they all provide estimates only. 

Home loan eligibility calculator

A home loan eligibility calculator helps you calculate the size of loan you may be eligible for. You’ll have to input some of your personal financial details such as:

• Your income
• Your annual expenses
• How many dependents you have 
• Any other loan repayments you are making
• The amount of interest you expect to pay
• The term (or length) of your loan

If you’ve entered everything correctly, the calculator will estimate how much you’ll be eligible for but you’ll still need to go through the application process to get the true amount. 

These can also be called borrowing calculators or borrowing power calculators. 

Loan repayment calculator

You can think of a loan repayment calculator as a mortgage calculator, since this type of calculator helps you understand the details of your mortgage once you know how much you plan to borrow. 

It will estimate how much you’ll pay on an ongoing basis, how you  will pay down your interest and principal over time and how much in total you’ll spend by the time it’s all said and done.

A loan repayment calculator doesn’t require as much input as the borrowing calculator does. 

You’ll just need to provide the following:

• How much you’ll be borrowing
• The term (or length) of your loan
• Your interest rate and whether it’s variable, fixed or introductory
• Whether you plan to repay the loan monthly, fortnightly or weekly

Home loan offset calculator

An offset account is a transaction account linked to your home loan. The more money you stash away into this account, the less you pay in interest on your home loan. 

An offset calculator lets you see how your repayment plan will benefit from a well-funded offset account.  

Other calculators

You may come across other home loan calculators, but most are just fancier versions of the loan repayment calculator:

• Extra repayments calculator. This lets you see what happens to your repayment plan if you decide to voluntarily increase your payment amount at a particular point in the future. 

• Lump sum calculator. This shows you what will happen to your repayment plan if you decide to make a large lump sum payment at some point in the future. 

• Home loan split calculator. This shows you how your repayments would look if part of your loan was set to a fixed rate and part of it to a variable rate. 

• Home loan comparison calculator.This lets you compare the repayment plan for two loans side-by-side, based on the differences in interest rates, loan term and fees. 

Who offers home loan calculators?

Nearly every home loan lender will offer a suite of home loan calculators to help you understand what you can expect when it comes time to actually apply for a loan.

Here are some Kiwi lenders who offer one or more of the home loan calculators mentioned above:

• ANZ
• ASB
• BNZ
• Westpac
• Kiwibank
• TSB
• BPI Family Housing Loan
• Kiwisaver
• Sovereign (recently acquired by AIA Group)

Each lender has different criteria it uses to work out your loan details, so each calculator might have small differences that take their particular criteria into account. 

For example, each lender will have a different fee structure, which may include an application fee and ongoing account fees (you can avoid some of these fees by taking advantage of special offers). 

That said, the calculators are only meant to provide estimates and are not considered loan offers.

The point is to educate yourself and to determine if you’re ready to take the next steps – which in most cases will be to start the application process or speak to a home loan advisor. 

What else do you need to know about getting a home loan?

Using a home loan calculator is a good way to educate yourself about how home loans and repayments work, but they aren’t the only tools you’ll need to get a full picture of your borrowing power. 

For example, they don’t take your credit score or credit history into account, and these pieces of information play a huge role in a lender’s decision to actually approve the loan.

With a free Credit Simple account, you can access your credit score and your credit history any time you want. Having this level of insight will help you work out ways to improve your score or to identify any dodgy activity like identity theft. 

We also have a learning library where you can learn to prepare for and optimise your home loan.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Everything you need to know about online home loan calculators appeared first on Credit Simple NZ.

Here at Credit Simple, we encourage you to check your credit score and keep tabs on your credit history. It doesn’t happen often, but if there’s a mistake on your file, you need to know about it and get it fixed.

We’re happy to report that since we launched in September last year, almost 3,000 Kiwis have queried errors on their credit file. New Zealanders are making the most of free and instant access to their credit scores and credit files, with more consumers checking that the personal financial details banks, credit providers and reporting bureaus keep on them is correct.

If you have a mistake on your file, such as a bill marked as unpaid when it’s in fact paid up, or bad debts in your name that aren’t yours, you risk being turned down for credit.

The figures mean just over one per cent of the 300,000 Kiwis registered with Credit Simple have queried something on their credit file.

CreditSimple.co.nz spokesperson Hazel Phillips says that might not seem hugely significant at first glance, but for those people, an error on their credit file could be the thing that stops them from getting a mortgage or opening a new electricity or phone account.

“A quick check of your credit score and file before you apply for a loan or new utility contract can save you a world of pain down the track. The last thing you want is to hear about a black mark on your credit file when you’re sitting down with the bank manager,” Ms Phillips says.

“Check your score before you need credit and if you see a mistake, tell us and we’ll help you get it fixed.”

Common errors on credit files include bad debts or unpaid bills from another person, sometimes with a similar name, being wrongly attributed to you, as well as bills or debts that have been paid, but are incorrectly listed as unpaid.

The post Are you part of the 1%? Keep tabs on your credit file so you can get mistakes fixed, fast appeared first on Credit Simple NZ.

The post Eight things about your credit history that may surprise you appeared first on Credit Simple NZ.

In the world of credit scores, we like to refer to those with a score of more than 900 as unicorns. They are rare and until now, almost mythical beasts, and only 9.2% of all Kiwis can call themselves a credit unicorn.

Everyone has a credit score. It’s a number between zero and 1000 that credit providers and banks use to determine how credit worthy you are.

The higher your score, the more likely credit providers are likely to lend to you and give you better interest rates to boot, says Credit Simple CEO David Scognamiglio.

“A good score can be the difference between getting a mortgage or not, and getting great deals on insurance, power and utility contracts,” he says.

“Until recently, your credit score was determined only using bad credit behaviour. Miss a credit card payment or pay your power bill late and your score would take a dive. Paying your bills on time and paying loans off in full, while the right thing to do, had little impact on your credit score. Your score wouldn’t drop, but it wouldn’t necessarily get any better, either.”

Comprehensive credit reporting is a new thing in New Zealand, meaning banks such as ASB and Westpac have recently started including the good stuff, like paying bills on time or early, on your credit file. More banks will soon follow suit. Finally, Kiwis are getting kudos they deserve for good credit behaviour and we’re stoked to be able to welcome more unicorns into the club.

The best part? Comprehensive credit reporting means Kiwi credit scores are beginning to rise, which means stronger negotiating power with credit providers and better deals for everyday Kiwis.

Are you a credit unicorn? Check your credit score now and find out.

The post 9.2% of all Kiwis are credit unicorns. Are you one of them? appeared first on Credit Simple NZ.

‘Going guarantor’ are two dangerous little words. “Nan, will you go guarantor on my car? You don’t have to pay any money.”

Stop right there. Going guarantor can be a great way to help others out. But it’s way more risky than most people think. Read this article before you say yes or no. The worst-case scenario is that the lender comes after you for the money. Parents have lost their homes from going guarantor and families have been torn apart. It happens.

Here’s what you need to know:

What’s a guarantor?
When Kiwis want credit to buy a car, or a house, or open a utilities account, sometimes they’re asked for a guarantor. That’s often mum or dad or a friend to guarantee payment if they default. Lenders ask for guarantors when the borrower’s credit score isn’t great, they don’t have a credit record, or too small a deposit. Parents or grandparents going guarantor on home loans is becoming increasingly common thanks to the high house prices and increasingly large loan to value ratios (LVRs) required to buy property.

A helping hand
It’s great to help out friends and whānau. Many Kiwis agree to go guarantor because they can or they like to help others. It’s only human.

It’s more than just a piece of paper
Many people don’t read the agreement they sign to go guarantor and even if they do, don’t understand the sting in the tail of the fine print.

Unlimited risks
You need to ask yourself if you can afford to pay the loan or bill if the other person can’t. What say they’ve not paid their electricity bill for a few months. Can you pay the arrears? By signing the guarantee you’ve told the lender that they can come after you if the other person does a runner from the payments. That could mean a debt collector on your doorstep taking away your car and other valuables, or in a worst case scenario putting your house up for mortgagee sale. “Ouch” is an understatement. What’s more, if you change your mind you can’t cancel the guarantee.

All their future debt
You’ll almost always find fine print that says you’re guaranteeing all of the other person’s current and future debt with that lender. That’s because there was an “unlimited deed of guarantee” clause in the fine print. It means that if your child or their partner takes out further loans with the same lender, you’re responsible for those as well. The Banking Ombudsman has heard cases where the guarantors didn’t know about new loans or they were responsible for debts even after a marriage broken up.

Wrecking your credit record
Another nasty problem rears its ugly head if the other person can’t pay and nor can you. It’s then that you’ll ruin your own credit record for a debt that wasn’t even yours.

If still want to go guarantor follow these rules:

• Have the mother of all discussions with the other person and their partner about the consequences
• Use a mortgage broker to negotiate with the lender to limit your guarantee to a fixed sum of money
• Arrange for your lawyer to review the guarantee document before signing and prepare an agreement for both you and the other person to sign
• Consider what happens if your child splits up from his or her partner. You don’t want to be left holding sexually transmitted debt
• In the case of a house purchase, ponder loaning the money for a deposit rather than going guarantor, but make sure a lawyer documents the transaction.

Sometimes going guarantor is the right thing to do. But many Kiwis have blotted their own financial future by going guarantor for a friend. Don’t let that be you.

The post The pros and cons of going guarantor appeared first on Credit Simple NZ.

An acquaintance said to me – rather smugly – the other day, “I don’t need to check my credit score, because I don’t have a credit history.”

“Oh, you don’t?” I said. “Have you checked it in the past and discovered you didn’t have a profile in the system?”

“No,” he said. “But I’ve never had any hire purchases or a car loan, so they won’t have anything on me.”

Many people think that a credit history is built solely from credit such as hire purchases, or from bankruptcies or court judgements. And indeed, when you go bankrupt or have a court judgement against you, or you default on something like a hire purchase payment, that goes onto your credit history.

Naughty stuff like this is what we call ‘negative’ information. But now there’s also ‘positive’ information, or ‘comprehensive’ credit reporting. That means that a lot more information now goes into your credit history.

“Do you have a power account in your name?” I asked. “What about your smartphone, and your home internet? Ever applied for a tenancy?”

Sure enough, it turned out he’s got all of these (and more) in his name. So I pointed out that it’s almost certain he indeed does have a credit history, because when you apply for power, phone, internet accounts (and so on), you check the ‘terms and conditions’ box, allowing that company to a) do a credit check on you and b) supply your payment history to credit reporting agencies.

All these things go into the calculation that makes up your credit score. So as you make payments each month, that information helps to show how financially responsible you are, and it gives companies an idea of whether or not you’ll be a good customer for them.

On the flip side of the credit coin, what doesn’t go into your score calculation? Well, assets, wealth and income aren’t part of your credit history. You could own umpteen properties, earn squillions, have loads of money in the bank but have a bad bill payment history and have a credit score that’s in the mud. Or you could be financially poor and have an excellent credit score, because you’re meticulous about paying bills on time.

It’s all about how well you manage your finances.

The post So you think you don’t have a credit history … appeared first on Credit Simple NZ.