How to Build a Good Credit Score from the Start

How do you start building a good credit score? A credit score is a relationship you have for life — or at least from the moment you open your first credit account — and we all have to start somewhere.

One common misunderstanding is that everyone is automatically assigned a credit score when they turn 18. That’s not true. Your first credit score is created when a credit enquiry is made about you — typically when you apply for your first credit card, open a utility account, or sign up for a mobile phone plan in your name.

Credit scores in New Zealand are independently determined by the country’s three credit reporters (also known as credit bureaux). Scores range from 0 to 1000, and most people begin somewhere in the middle — generally between 300 and 600 — depending on the types of credit they hold and how they use it.

The good news? It’s never too early to start building a better credit score. Here are some simple ways to get started:

1. Demonstrate financial control

Start with a manageable credit card limit. Your credit report doesn’t show how much you owe, only the credit limit — the total amount available to you. A high limit might suggest you're at risk of being in substantial debt. A lower, more manageable limit may be seen as lower risk.

2. Pay on time

It sounds obvious, but building a strong repayment history from the outset is essential. Pay the full amount owing on loans and utility bills by the due date. With credit cards, aim to pay the full balance each month, on time.

3. Don’t apply for multiple credit accounts at once

Before applying for credit, check whether the enquiry will leave a hard footprint (which can affect your score) or a soft enquiry (which won’t). Multiple hard enquiries can suggest financial stress or desperation, which may negatively impact your score. Always do your research first to find the credit product that best suits your needs before applying.

4. Don’t avoid credit entirely

Surprisingly, having no credit can be just as unhelpful as having bad credit. If there’s no record of your repayment behaviour, there’s nothing for lenders to assess. Having manageable credit, suited to your financial situation, allows you to build a positive history. Even a line of credit you don’t use can help. Remember: repayment history disappears from your credit file after 24 months, and credit enquiries after five years — so your history can vanish over time if you’re not actively using credit.

5. Let time work for you

If you’re just starting out, this one may feel frustrating — but a longer credit history generally leads to a stronger score. More history means more data for credit reporters to assess your risk. That said, as you get older, remember the five-year window. If you pay off a mortgage or credit card, consider keeping the account open to maintain an active history.

6. Check your score

It’s wise to check your credit score every six months, and request your full credit report at least once a year — more often if you notice a sudden dip. Look out for anything unexpected or unfamiliar. If you find an error, report it to the relevant credit bureau for investigation. Checking both your score and your report is especially important before applying for a loan or other credit.