A new credit-risk assessment is in town - and every New Zealander could come under the mircroscope.
From next week major banks and thousands of businesses will have a single figure to represent your entire credit history.
Veda Advantage is launching the new score system - which will assess people's credit-worthiness through a special report.
Aimed at small to medium-sized businesses, the scheme has been a year in the making - and has cost around $2m, so far.
And while there are fears 'predatory lending' will focus on those financially vulnerable - Veda Advantage's John Roberts says it's time for New Zealand to advance its credit system.
The new credit scores collate information contained in existing credit reports, including how many times people have sought credit, and if they have defaulted on debts or been bankrupted.
The score scale runs from minus 330 to 1000, although most New Zealanders would have a score above zero, Veda Advantage New Zealand managing director John Roberts said.
The score, which is in addition to credit reports, measures the applicant's potential credit risk and would be calculated at the point of application.
You would score around 750 if you rarely apply for credit - and pay it off.
- Around 590 if you apply for credit frequently but pay it off.
- A score of 430 if you've applied for finance numerous times from multiple lenders and have a patchy record.
- You would score 200 if you have numerous credit applications and have defaulted.
A person with a score of 100 or below would find it difficult to obtain credit from a bank or finance company. The average score would be between 500 to 600, and a person with a score of 700 would generally be a good credit risk.
"New Zealanders need to better understand their own personal credit rating and the impact of a good or bad rating on their financial position," Mr Roberts said.
The new system, to be introduced on August 2, was intended to provide greater transparency and understanding about individual creditworthiness, he said.
A poor score could be improved by paying outstanding loans, not defaulting on debts and avoiding bankruptcy.
An average score could improve through personal and financial stability, consolidating debt and only applying for credit when it was needed.
A good score was based on maintaining a solid financial position, borrowing from reputable lenders and paying debts.
3 News / NZPA