Complete Guide to Building Credit After Migrating to New Zealand

Many people migrate to New Zealand, and while they can get jobs and bank accounts, many struggle to get loans for their homes, cars, and other needs. 

There’s also a lot of conflicting information out there about credit histories and credit scores. Some say a credit history doesn’t matter, but many articles from lenders stress that yes, you absolutely need one! 

Whichever side of the fence you’re on, many sources agree that although a report isn’t always requested when you apply for a small loan, a bad credit will absolutely hinder your financial prospects. Some even go so far to say that having a credit score of 450 or below will make it hard for you to get a loan at major banks. 

This article will answer these questions and set the record straight on some common myths surrounding this subject. 

The First Thing to Know About Credit Scores in New Zealand

Credit scores in New Zealand work differently than abroad. While other countries use complex three-digit scoring systems, the Kiwi approach focuses on both positive and negative financial behaviours over the past five years. 

Your credit report in New Zealand tracks:

• Payment history on loans, utilities, and credit cards
• Defaults (payments over $125 overdue for 30+ days are kept for 5 years)
• Delayed payments (kept over 2 years)
• Length of credit history
• Types of credit 
• Recent credit applications
• Multiple bankruptcies (stay on your report indefinitely)

Not everything affects your score or is listed on your history, including:

• Your bank account balance
• Your income
• Your assets like properties and stock portfolio

For young people or newcomers without credit history, alternative scoring methods look at payment records for things like utility bills and rent. This creates a more complete picture of financial responsibility, even without traditional credit history.

Understanding Credit Score Differences: NZ vs The World 

Let’s dive into how New Zealand’s credit scoring stands apart from other countries. 

Each credit reference agency has its own way of calculating credit scores, ranging from 0 to 1000 or 1200. Your score might vary based on who’s checking it – though the differences usually aren’t dramatic.

Here are the three main credit reporting agencies and their scoring ranges:

	Low	Fair	Good	Very Good	Excellent
Centrix	0 to 494	495 to 649	650 to 768	769 to 845	846 to 1000
Equifax (via My Credit File)	0 to 509	510 to 621	622 to 725	726 to 832	833 to 1200
Illion (via Credit Simple)	0 to 299	300 to 499	500 to 699	700 to 799	800 to 1000

What these Scores Mean:

• Excellent: High approval odds for large loans with extra borrowing options
• Very Good: Strong creditworthiness with good approval chances
• Good: Still favourable for loan approval with moderate risk
• Fair: Higher interest rates possible, more financial checks needed
• Low: Limited loan options with higher interest rates

Did you know that a credit score below 450 could block you from major bank loans in New Zealand?

The Truth about Blacklists 

While New Zealand doesn’t have a national credit score or national blacklist, individual lenders often maintain internal records of problematic customers. 

For example, if you’ve defaulted on a payment with Bank A, they might put you on their internal “naughty list.” However, Bank B might still be happy to work with you, which is why shopping around can yield surprising results.

What it Takes to Build a Credit History

It takes less than 6 months to build a credit history, but getting an excellent score is another matter altogether. That could take years. 

Here are two ways for newcomers to get their credit history started:

1. Register to Vote

Signing up as a vote is a win-win because doing so fulfills your voting responsibility, plus it verifies your address and identity to local lenders and reporting agencies. 

If you’re not eligible to vote, just submit a valid ID like a driver’s license and proof of address to any of the three major credit reporting agencies. If you have utility bills under your name, there’s a good chance you already have a credit history going—even if it’s short—so you might as well request it when you submit your documents. 

2. Build Your Credit History with Everyday Expenses

Paying for many everyday expenses can build your credit history—as long as you’re paying it on time, of course. Your internet, cable, phone, and power bills all tell the story of your finances. 

Credit cards, buy now pay later apps like AfterPay, and overdrafts on your bank account are also recorded on your credit history. 

If you can afford it, sign-up for a low-fee credit card or a pay later app so you can start building a good relationship with some lenders. Be cautious in using these products though, because it’s so easy to get hooked on pay later schemes. Use them in moderation, and don’t buy things you don’t need or are over your budget.

What Creditors Look at on Credit Reports

The longer your history is with financial institutions, the more predictable your behaviour will be for creditors. 

The agencies will then try to match your information, like your name, social security number, or address to its database, and from there generate a history with a credit score they’ll submit to the lender. 

Here’s what creditors look at on your report:

• Do they pay on time?
• How much credit or loans are they carrying? Are they over extended?
• Have they applied for a credit card or loan recently?
• Do they have any delinquent accounts?
• Do they overdraft their accounts often?

Having a clean record with no red flags will help you get the maximum amount you can borrow based on your income. 

Easy Credit Cards to Apply for Migrants or Starter Credit Cards

Things are relatively easier in New Zealand, unlike the United States, where it’s hard to get a credit card unless you have a lengthy history and high credit score first. 

Many college and post-graduate students are eligible for a student credit card, even without a credit history. Not all student cards are created equal though, so compare the interest rates and fees before you apply. 

Employees or contractors, however, are a different story. You’ll need to show the banks that you have a long-standing job of at least 1 year. Contractors with multiple employers may have trouble with this requirement, as most lenders prefer customers with one or two stable sources of income instead of several smaller paying jobs. Worst case scenario, you may be eligible for a credit card, but it will come with a high-interest rate. 

3 Low-Interest Rate Credit Cards with Simple Requirements for Newcomers

While there’s no such thing as starter credit cards in NZ, unlike the way it’s marketed in the United States but these are the cards we found to have low interest rates, fees, and easier application – meaning you don’t need an existing bank account with the institution.

ANZ Low-Rate Visa

• Interest rate: 12.9% p.a.
• Annual fee: $0 as of this writing
• Interest free days: 55

AMEX Low-Rate Credit Card

• Interest rate: 2.99% p.a. for the first 6 months, then 12.69% p.a. afterwards
• Interest free days: 55
• Annual Fee: $59

KiwiBank Zero Visa

• Interest rate: 12.9% p.a.
• Annual fee: $0 as of this writing
• Interest free days: 55

Westpac Credit Card 

• Interest rate: 13.74% p.a.
• Annual fee: $59
• Interest free days: 55

Credit Card Application Requirements

Every lending institution has its own set of requirements so check with the bank when submitting your application. 

Here are the requirements for the suggested starter cards listed above:

• Aged 18 yrs or over
• No history of payment default
• New Zealand work permit
• For those self-employed, you need to be in business for at least 18 months
• Driver’s License or other valid ID
• Proof of income or payslips
• Inland Revenue Department (IRD) statements
• Proof of billing and valid residential address
• A good credit history

What is Credit Utilisation and Its Effects on Your Home Loan Application

Your credit utilization is the amount of money you borrow, compared to the limit you were given. It’s an important factor in your credit report because lenders check this to see how much credit you still have available—or if you’re over borrowing and perhaps struggling to make ends meet. 

Lenders look at this because they want to make sure that you can repay what they lend you, given your income and how much you’ve already borrowed from other providers. 

Experts suggest a utilization rate of 30%, meaning that you only borrow 30% of your credit limit. To lenders, this suggests you’ll still have plenty of money for necessities and still pay other existing obligations.

Unfortunately, unused credit is viewed differently when it comes to home loans. If you have a credit card with a limit of $10,000, whether used or unused, it will reduce your potential loan limit by $50,000. It doesn’t matter if you pay your balance in full every month. 

But why is this the case? Because mortgage providers look at the long term as it can take 20 to 30 years to repay a home. Even if you don’t use that full credit limit or don’t carry a balance now, you may do so in the future. 

Building a Credit History in New Zealand

It’s not that hard to get a credit history in New Zealand if you pay your bills on time. If you’re not confident that you can get a loan for a house or car, try shopping around to see what some lenders can offer you. 

Worst case scenario, you can start building your credit first with a low-fee starter card and then re-apply for that loan you want after six months.