It's so common for us to hear people talking about their 'credit score'...So, does a credit score really matter and what's it all about?!
In New Zealand, credit scores are not as important as they are in the United States when it comes to obtaining a home loan.
Unlike in the US, where credit scores are a major factor in determining whether or not a borrower is approved for a loan and what interest rate they receive, in New Zealand, banks and other lenders take a more holistic approach to assessing a borrower's creditworthiness.
We've even heard of people taking on debt or credit cards to 'improve their credit score' - Please don't do this! It's not important and in New Zealand it is much likely way better to have no credit history than a better credit score!
One reason for this is that credit scores are not as widely used or understood in New Zealand as they are in the US. While credit scores are a common part of the financial landscape in the United States, where they are used by lenders, landlords, employers, and others to assess a person's financial health and reliability, they are not as ubiquitous in New Zealand.
Instead, lenders in New Zealand tend to look at a range of factors when assessing a borrower's creditworthiness. These can include things like the borrower's income and employment history, their savings and assets, and their overall financial situation. Banks and other lenders in New Zealand also tend to be more willing to take a personal approach to lending, which means that they are often more willing to work with borrowers to find a solution that works for them.
Of course, this is not to say that your credit history is completely irrelevant in New Zealand but the actual score itself virtually is...
In conclusion, credit scores just aren't that important in New Zealand when it comes to obtaining a home loan as they are in the United States. The banks here tend to looks at things more holistically. So - stop stressing about what your credit score is and definitely don't take on any debt you don't need to try and improve it...it's just not a thing!