The average credit scores for Kiwis plunged across the board during the Covid-19 lockdown and have yet to bounce back to pre-pandemic levels.
Credit ratings are based on how often a person applies for credit and how good they are at paying their bills and loans on time.
Individuals have a credit score out of 1000 with those scoring anything over 800 seen as a good credit risk for those lending money to them.
Credit score maps created by credit reporting bureau Centrix Group show average scores dropped dramatically during April, especially in the North Island and the West Coast of the South Island.
Keith McLaughlin, managing director at Centrix Group, said demand for credit slowed in the two weeks ahead of the March 26 lockdown and then dropped like a stone during April.
"It fell down to really low levels."
McLaughlin said that was due to far fewer mortgages being settled as home purchases were left in limbo and finance applications for luxury items like vehicles plummeted.
Vehicle finance applications fell by 94 per cent, he said.
The area of borrowing which did bounce back quickly was buy now pay later credit which allows consumers to spread payments for items they purchase over a number of weeks.
"Even towards the end of April they were really starting to kick back into action again," he said.
But he said a consequence of the rise in people using buy now pay later to finance their purchase was an average fall in credit ratings.
"They tended to attract people who were either buying online or putting things to one side on laybuy - as a result of that we saw the average credit scores drop as well because traditionally those who are buying houses or buying cars generally have a higher credit score than those buying jeans and T-shirts."
Typically those who can't make their mortgage or loan payments would also record a hit on their credit scores but bank deferral schemes have seen that put on hold for now.
McLaughlin said even now the higher use of buy now pay later was having an impact as those with lower credit scores were taking on more debt than those with higher scores.
He said credit applications were back up to around 94 per cent of pre-Covid levels but those with lower credit scores were back up to 105 per cent compared to those with a score of 800 per cent, where applications were at 88 per cent of pre-Covid levels.
Asked if it was a bad thing if people with poorer credit ratings were borrowing more McLaughlin said it depended what they were borrowing for.
"Some of those are making sure they have room on their credit card or organising a
personal loan so if they do lose their job they have some credit behind them, so I don't think it is all irrational spending.
"As long as they are conscious of the fact whatever they borrow they have to pay back."
The average credit scores for those aged in their 30s and 40s remain the worst hit by Covid-19.
For women in their 30s the average has dropped from 617 to 608 and for those in their 40s it is down from 655 to 650.
For men in their 30s the average has fallen from 638 to 629 and those in their 40s the average has dropped from 674 to 658.
Men over 65 were the least impacted by the lockdown with barely a blip in their average credit score.
McLaughlin said those in their 30s and 40s were still playing catch-up.
"Credit confidence and credit demand is driven largely by confidence - if you feel good about your job and ongoing employment then you are more likely to go out and borrow money and have confidence to do so - and I think when I look at unemployment it has been that age-group more than anyone else affected.
"I think that probably has reflected the fact they are playing catch up because they have been the most impacted by the tightening of the employment market."
He said those in the North Island had also been more affected than those in the South Island because of job losses. South Islanders tend to have higher credit scores because they are more likely to be older and own their own home.
Can't pay for your loans or bills?
Credit scores aren't static and can be improved even if you have a history of loan or bill defaults.
"If you defaulted on a $1000 credit facility and couldn't afford to pay it - that will impact your credit score quite significantly."
But McLaughlin says if you walk in tomorrow and pay $100 that will improve your credit score. Paying something is better than nothing.
If you have got into difficulty paying debt or bills as a result of Covid-19 the first thing is to call your lender or whoever the money is owed to.
"Anyone affected by Covid who can't pay their debts should talk to the bank, finance company explain the situation - those institutions are very sympathetic at the moment. It's better to front foot it."
If you do get into trouble get budgeting support - call someone from national budgeting advice service FinCap because they can also approach anyone you owe money to to set up an arrangement and give you free advice.
"They take the burden off your shoulders."