Can having Bad credit in New Zealand affect your ability to get a loan?

While some of us have been blessed with privilege and pristine credit ratings, it is not the case for the majority of New Zealanders. Sooner or later, we find ourselves in a jiffy and end up ruining if not completely damaging our credit ratings.

The bad news is that it does impact your ability to draw loans and mortgages from big corporations but the good news is, it is not the end of the world. There are a variety of sources you might still be eligible for, especially if its short term and small loans you are after.

What is Bad Credit?

In short, your ability to pay back loans and your overall financially reliability, which is calculated taking into account a number of different factors.

Having bad credit does not mean that all doors leading to loans have been shut on you. While most banks will not deal with a person with bad credit, there are still a number of reliable providers for bad credit loans NZ.

What is the credit rating score?

Your credit rating score is basically your creditworthiness and it is calculated based on your historical transactions using credit. Depending on how frequently you borrow, how well you pay it back, missed payments, etc. you are given a rating between the range of 0 to 1000.

Main Factors that contribute to your Rating

Your Credit History: If you’ve taken personal loans in the past, your history of repayments and any missed or late payments and defaults will reflect in your credit history. This is by far the most important factor taken into account. A good credit history virtually guarantees not just getting loans but getting good terms and conditions on it. However, a bad credit history, you are still eligible for a variety of loans, but not all of them.

Current Owing: The total amount of owing you have including any credit you’ve taken abroad. This includes loans taken out in NZ including the amount you owe on all your credit cards.

Payback Times: If you’ve been paying off your previous loans within due time, it impacts very positively on your ability to take out a loan. In fact, the faster you, the better.

These factors amongst a few others are the main things contributing towards your positive or negative credit scores.  Taking all of this into account, financial institutions calculate your creditworthiness and reliability to pay back the loan in full and in time.

The Good News

It is understandable that no one can truly control urgent and sudden financial needs and emergencies don’t care if you have good credit or bad credit. But the good news is, even if you have bad credit, alternative financial resources are available and easily accessible.

In most cases, you can apply online and your application is assessed quickly and funds are transferred into your account directly. For short term loans, you can get up to $1500 depending on your employment and credit history.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.