A credit score indicates how credit worthy you are and indicates to lenders (and other credit or service providers) how likely you are to pay your bills on time. It uses a scale from 0 - 1000, with most credit scores being between 300 - 850.  Having a good score is important as a low credit score can mean that companies may not want to do business with you / lend to you or you may be charged higher interest rates.

Your credit score is made up both positive and negative things such as any defaults, court judgements, a full history of your bill payments (so if you pay on time it will increase your score) plus how much debt you have.

If you don't know your credit score you can get it easily from websites such as Credit Simple which will give it to you for free. If you want more detail you'll need to get a copy of your Credit Report (from a credit agency such as Dun and Bradstreet, Centrix or Veda (now Equifax)), this should still be free but may take a bit more time.

If your credit score is not as high as you'd like it to be, here are some easy ways of improving it:

• Pay all your bills on time - Life can get busy and it's easy to forget to pay something so setting up AP's or DD's for your bills can make this a whole lot easier.
• Be careful how often you apply for credit - applying for credit too often can lower your score
• Pay any fines you receive on time
• Give it time - if you only have a very short credit history this can negatively affect your score.
• Stay put - living in your address for only a short period can also bring your score down

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans