Your credit rating is now free and accessible online
Another barrier to consumer empowerment has fallen to technological disruption with the launch of a free credit rating service.
CreditSimple.co.nz brings an overseas model to the local scene and gives instant access to an individual's credit score based on information held by credit agencies.
The website makes its money by then enabling users to get better deals from banks, energy companies and telecommunication providers, who are big users of credit agency services, and taking a commission on the deal.
The concept is an expansion of Australian businesses, including ASB’s parent, Commonweath Bank, which has a version called Credit Savvy. CreditSimple itself is a subsidiary of Dun & Bradstreet, an international credit agency.
A credit score is a number between 0 and 1000 that indicates how good an individual is at paying their bills. It's the primary measure banks and credit providers use to determine whether they will give someone credit, and at what price.
Getting a better deal
Chief executive David (“Scogs) Scognamiglio says many people don’t know they have a credit score and how to use it to get a better deal from the likes of The Warehouse, Co-op Bank and Baywide, which have signed up with CreditSimple.
”We want them to use it and see where they sit in the world,” Mr Scognamiglio says.
Research carried out by Credit Simple shows 92% of people don’t know their own credit score while 72% of Kiwis don’t know what a credit score is. In contrast, about 60% of US consumers don’t know their credit score, and 85% of consumers in Australia don’t know theirs.
Credit Simple’s research shows only 13% of people have ordered their credit file, although 84% say they are interested in finding out what their score is. A small proportion – just 15% – have used their good credit score to ask for a better deal.
If the score is low (below the average 526), Mr Scognamiglio says it's a spur to improve the handling of debt or seek a re-rating, which CreditSimple says it also possible through its website.
The online credit score concept started in San Francisco (where else?) in 2008 and has since spread from the US – where there are two major operators, Credit Karma and NordWallet – to the UK, Europe and now Australasia.
CreditSimple has hired journalists and broadcasters to spread the word through social media.