Reviewing a Credit File with Your Client

The credit file review is one of the most important pre-application steps a broker can take with a client, yet it is often skipped in the rush to get an application lodged. Taking the time to review a client's credit file before submitting anything to a lender serves multiple purposes: it surfaces issues that could cause a decline, it helps the broker select the right lender for the client's profile, and it gives the client a chance to understand and address anything negative before it is seen by a credit team.

How to Access a Credit File in New Zealand

In New Zealand, credit information is held by credit reporting agencies. Clients can request a free copy of their own credit report directly from these agencies, and they are entitled to do so. The process typically takes a few days when requested online. Brokers should encourage clients to obtain their own report early in the engagement, and to share it so both parties can review it together. This is a straightforward and low-cost step that frequently prevents problems later.

Some clients are hesitant to look at their credit file because they suspect something negative may be on it. Brokers should frame this as a proactive step: it is far better to know what is there and address it before applying than to discover a problem after a lender has conducted their own check. A declined application can itself affect a credit file, so getting ahead of potential issues is genuinely in the client's interest.

What Appears on a Credit File

A New Zealand credit file contains a range of information relevant to a client's borrowing profile. This includes personal details, any current or historical credit facilities (loans, credit cards, lines of credit), repayment history (including any late or missed payments), defaults, court judgments, and credit enquiries made by lenders. The file may also include a credit score, depending on the reporting agency and the level of report requested.

Understanding each of these categories helps brokers interpret the file accurately and explain it to clients in plain language. Repayment history in particular has become increasingly important under comprehensive credit reporting, which captures both positive (on-time) and negative payment history. A client with a history of consistently meeting their obligations has a more complete positive story to tell than under the older negative-only reporting regime.

Identifying and Addressing Issues

The most common issues brokers encounter when reviewing a credit file include defaults (unpaid debts that have been referred to a collection agency), late payment flags, and credit enquiries that suggest the client has recently applied for multiple forms of credit. Each of these is interpreted differently by different lenders, and understanding how each lender weights these factors informs where to place the application.

Where a default exists, it is worth understanding the full story. Was it a legitimate debt that went unpaid, a disputed amount, or an error? Defaults that have been repaid are viewed more favourably than those that remain outstanding, and some can be disputed and corrected if they resulted from an error by the creditor. Encouraging clients to address outstanding defaults before applying is generally worth the short delay it involves.

Errors on the Credit File

Credit files are not infallible, and errors do occur. Common issues include debts that have been repaid but not updated, defaults that were disputed and resolved but remain on the file, or records belonging to another person with a similar name or shared address. Where a client identifies something that appears to be incorrect, they have the right to dispute it directly with the credit reporting agency.

Brokers should not dismiss client concerns about errors as unlikely. Encouraging clients to follow the formal dispute process before applying is a legitimate and valuable step. Resolution timelines vary, but lenders are generally prepared to consider supporting documentation where a client can demonstrate that a negative item is being actively disputed.

Setting the Right Expectations

A credit file review is an opportunity to have an honest conversation with the client about their profile and what it means for their application. At Chaperone, we help brokers document these early-stage conversations and the client context that supports them. A broker who arrives at the lender with a clear picture of the client's file - and the context to explain anything unusual - is in a much stronger position than one who is encountering these details for the first time alongside the credit assessor.