Credit rating


#1

Hope someone can shed some light on this topic.

Partner has recently requested a credit rating via one of the large agencies. Is financially solvent. has had HP on vehicles, which if anything have been paid back quickly. Keeps his CC low and pays it in full each month etc. Nothing against him personally yet his review shows he is below 50% of New Zealanders when it comes to a credit rating.

Mary


#2

There’s a blog on here somewhere that I read awhile ago about credit scores and how they are calculated - apparently they take into account how much potential debt you have, not just actual debt, so if your partner has lines of credit open (like credit cards or HP) then it’s flagged as potential for debt. As I understand it, the fewer lines of credit you have open, the better. And also making sure you pay all bills etc. on time because apparently late payments get counted against your credit score too and info from up to 5 years (maybe 7 years? Can’t quite recall) still counts in some cases.

The blog said you can improve your score over time too. Might be worth a read!


#3

I thought that might be the case, wasn’t sure. Will search out the blog. Seems very unfair for someone who otherwise may be ‘shopping around’ changing credit cards etc to save on fees etc, while ultimately damaging his credit rating.


#4

That is exactly what people are doing. And it is completely unfair and unnecessary. Credit scoring does not benefit the consumer.
My son is 27yrs old and he was shocked to find his credit score was below 550. He’s never been in default or had any judgements or insolvencies against him.

The bank asked him if he wanted to know his score. What the bank didn’t tell him was that he lost points against his credit score by applying for a loan because the bank credit checked him. The bank also did not inform him that he could have applied to Veda himself for a copy of his own credit report and then given a copy to the bank, because no points are lost when one requests a copy of their own score. The bank also didn’t inform him how many points would be lost against him before they did the credit check, so he did not have the option to make an informed decision and to say no to the credit check. And just how do you get your credit score without losing any points. You must pay for it. $51.95. The free report does not contain the credit score. I opened a bank account with no lending or overdraft facility and lost nearly 70 points. My credit report has actually aged artifically and the score has been damaged as result. Veda are still investigating. Credit score damage is occuring without the debtors knowledge. Disputed debt can also be listed on a credit report.  If there are errors on a report the burden of proof is on the debtor (customer) to prove the entries are incorrect. Also a creditor or bank or finance company that lists debt against a person won’t update the credit report to show that an account has been closed or paid in full.
Credit scoring has no standing in law and its open to abuse. When all creditors, financial service providers, utility provides subscribe to it, there is nothing we can do about it.

Something else most people don’t know. PPSR =  Personal properties security register. Debt against you can get listed there as well. Some banks have a blanket term for ensuring they have security over everything.
So whats the purpose of credit scoring. To stop you shopping around and getting the best deal. If all your lending is with the same bank and you default or fall into hardship  its easier for them to take your assets if they are all in the same place.

Credit reporting and scoring is a form of control. It restricts freedom of choice. The scoring formular Veda uses is protected by law so it can keep secret its system so it can never be challenged.


#5

Thanks for your posts on this subject @Anonymous. I find them educational and it’s obvious this is a subject you have some experience (or reading) of. I suggest there is another way to look at it however, and this is banks have to lend credit to make a profit. While interest does not account for all their income, it’s a substantial and necessary portion of their revenue. With this in mind, as insane as the scoring system is, I expect banks and finance companies will wise up to this.


#6

Hello @michaelnz
Yes it is the duty of any business to create a profit. That is so tax can be paid and businesses can employ people. If the credit scoring system was necessary the other two reporting companies would use it also but they don’t. I have had some experience with the three credit reporting systems I am conducting research but I don’t claim to be an expert, but I can back up all my claims with evidence. I have spoken to two bank managers face to face and also to two of the three reporters about credit scoring. There is a lot people don’t about it because there is a substantial code of silence around it. My hope is to bring awareness to credit scoring. Some people don’t realise that they even have a credit report, let alone a score. I’ve put a fraud statement against my credit report and I have a police report against it also. The Police Officer hadn’t even heard of credit reporting at all. My police file is listed as “other incident” don’t know if that is because he didn’t know which category to put it in.
The next time you open a brand new bank account without any lending or overdraft ask the bank how many points are going to be deducted from your credit score. They won’t be able to tell you. If you are nearing the banks credit score threshold you may never know until you have been refused credit or opening a bank account. That is when most people realise with shock that they have a credit report, once applications for money, account and utilities start being rejected. Its too late then. With comprehensive credit reporting now in place since 2012 even if you are late paying just one day (24hrs) paying the monthly required payment on a credit card (example), that is a negative strike against you.

  • Anonymous

#7

In response to  post:

Lenders and credit rating agencies would like people to believe credit scoring is a big deal and adverse information is the end of the world, but I have not seen any evidence this is the case. Select any utility you like - there is competition in the market and most companies do not do credit checks. Likewise, I have opened new personal and business bank accounts before with no credit check entries showing. It’s my observation even bankruptcy appears to not be the end of the world based on what I have seen of people who have experienced it.


#8

Perhaps everyone’s experience is different.
My main beef is that we don’t have any right to know how many points will be deducted before a subscriber accesses our credit report.