New Zealanders need to protect their credit record and make sure it is accurate, the Privacy Commissioner says.
The call comes after credit bureau Veda Advantage announced it was introducing a new credit scoring system next month, which it says should make it easier for people to understand their creditworthiness.
The new credit scores collate information contained in existing credit reports, including how many times people have sought credit, and if they have defaulted on debts or been bankrupted.
Privacy Commissioner Marie Shroff said it was important for people to be "proactive in protecting their credit record".
It was important that people knew they had free access to their own credit reports so they could ensure their credit record was accurate, Ms Shroff said.
Inaccuracies could really harm people, she said.
"Credit reporting raises many privacy issues.
"It involves pooling financial and other data on individuals into large databases that are accessed by thousands of businesses and individuals," Ms Shroff said.
Veda Advantage New Zealand managing director John Roberts said the score scale ran from minus 330 to 1000, although most New Zealanders would have a score above zero.
The score, which was in addition to credit reports, measured the applicant's potential credit risk and would be calculated at the point of application.
A person with a score of 100 or below would find it difficult to obtain credit from a bank or finance company. The average score would be between 500 to 600, and a person with a score of 700 would generally be a good credit risk.
"New Zealanders need to better understand their own personal credit rating and the impact of a good or bad rating on their financial position," Mr Roberts said.
The new system, to be introduced on August 2, was intended to provide greater transparency and understanding about individual creditworthiness, he said.
A poor score could be improved by paying outstanding loans, not defaulting on debts and avoiding bankruptcy.
An average score could improve through personal and financial stability, consolidating debt and only applying for credit when it was needed.
A good score was based on maintaining a solid financial position, borrowing from reputable lenders and paying debts.
