A credit score provides a picture of financial history and good one can be the ticket to renting a home, applying for a mortgage and getting hooked up to household services.
As banks, finance companies, landlords and prospective employers may ask to do a credit check before offering services, it's useful to check the information before they see it.
Newshub spoke to credit bureaus about the difference between a 'good' and a 'bad' score, the types of information recorded and how to challenge anything that's incorrect.
Credit Simple CEO David Scognamiglio, said that credit scores are ranked between 0 to 1000 and most people have a score of around 500 to 700. Age - and having a mortgage - are among the things that can affect a person's score.
"With [a lower] score, there's [unlikely] to be much information available, which on a positive note, means there's nothing negative.
"It could also mean that your good history with your current credit provider is not yet reported, [as] credit reporting bureaus don't yet have [complete] information from all credit providers," Scognamiglio explained.
A 'low' score between 100 to 300 is likely to be due to payment defaults, while a score above 700 is likely to mean a person has proven themselves as a prompt payer.
"If you don't have defaults or poor payment history (e.g. paying late), a high number of credit enquiries - especially recent ones for small amounts - could be the reason for a lower score," Scognamiglio explained.
"Scoring in the [over 700] range will often be associated with being in the older age group, having been disciplined with credit applications, having a mortgage and/or investment property and paying accounts on time," Scognamiglio added.
Typically, a credit report includes information about open accounts, e.g. credit cards, home loan or mobile phone accounts and any unpaid debt, bankruptcy or court order information.
"Any missed payments stay on file for two years.
"Information about defaults (an outstanding debt for a long period of time) can have a massive impact and will stay on file for five years," Scognamiglio explained.
Although landlords can request to check a person's credit score, a spokesperson for NZ Equifax credit bureau confirmed that tenants' rental payment history isn't shown.
"Prompt rent payments and rent arrears aren't included on a person's credit file," the spokesperson confirmed.
If a credit score is low, ASB Bank advises people to develop the habit of paying on time (e.g. by Direct Debit) and keep finance applications to a minimum.
"Pay your bills on time: this is the easiest way to build your credit score.
"Don't make too many applications for credit: This may suggest to lenders that you struggle to pay back the amount borrowed," the ASB website states.
Information listed on a credit report can be challenged by making a 'dispute request' on the credit bureau's website.
"Through Credit Simple, users can check their score for free and challenge it using a 'data change request': if your dispute is upheld, your score will go up," Scognamiglio explained.
Governed by the Privacy Act 1993 and the Credit Reporting Privacy Code, credit information can only be used for certain purposes and there's an option to temporarily suspend the information being shared.
"Financial institutions and landlords must request permission directly from the consumer to check a prospective tenant [or] borrower's credit score," a spokesperson for Equifax confirmed.
"You can also seek a credit file freeze which will mean that a credit reporting agency cannot share information for two weeks: at the end of [that], you can request a freeze of a further 12 months," Scognamiglio added.
As required under the Credit Reporting Privacy Code, Credit Simple and Equifax are among the credit bureaus that provide a free credit report within 10 days of a request.
People who are unsure whether their credit score will impact on their ability to get finance are advised to check their file for any incorrect information, such as missed payments, defaults and court judgements.
"Getting these off your file will make a big difference," Scognamiglio said.
