Late last year NZ introduced credit scoring for the first time. Before that, credit reports merely consisted of basic information about a person, along with listing credit enquiries and any defaults. Pretty boring stuff.
Like a total geek, I was itching to find out what mine was. And I have to admit, I was a little disappointed.
First, let me point you to the totally unhelpful Veda page, which attempts to explain the scoring system. (This is more or less what the informational brochure enclosed with our reports contained). The diagram almost implies that 600 is an average kind of score, although I’m not sure if that’s the message they meant to convey.
One thing to note on the report is the factors which affect scores.
- Individual credit shopping pattern
- Age of credit file
- Demographic stability
See that last one? Yeah, that one that has absolutely nothing to do with ME. I can understand lumping all drivers under the age of 21 into one group for insurance purposes, but for credit reporting?
Anyway. I am slightly annoyed that I come in at just under 600 on my Veda score (588 to be precise). I can only assume (aside from being classed in a young, risky age group) this is due to the short length of my credit history, and perhaps the number of credit inquiries? I have nine all up: two from my internet providers, one work related one, one from another bank and the rest are all from my bank. Obviously they’ve been checking up on me without my knowledge.
I wonder if my available credit and use of overdraft also contribute to the score. It’s not very clear to me exactly what gets reported. I know that prior to the introduction of the score, hardly anything at all was reported unless you went into default on an account. You guys in the US have all kinds of crazy criteria for this with your available credit ratio at any given time, but I highly doubt we’ve advanced to that stage yet. According to this article, credit agencies can only collect information on credit defaults, judgements and bankruptcies – data considered to give only a “negative” picture of someone’s credit history.
As for T, his file is six months older than mine, he has slightly fewer enquiries and his one small default brings him in at 485 – just in the yellow zone, as opposed to the green.
1000 seems so far away. But realistically, I have no need for credit, and I believe a perfect score is unnecessary. I know companies that will help you repair your credit will all say other wise. I think scoring is a positive move; I guess I’m just peeved that I barely made it into the green zone on the spectrum, especially after seeing a commenter on Lady in the Red had a 900 plus!