Why two kids are better than one for your credit rating

Couples with no or only one child are more likely to have a lower credit score than those with two or three children. Photo/Tom Wang.

People who are married and have two or three children are more likely to have a higher credit score than those with one or no children.

Research by credit agency Credit Simple has analysed the data of 2.2 million Kiwis and found certain factors are more likely to point to a person having a higher score, which could allow them to negotiate better deals when it comes to borrowing.

People who rent, smoke and have six or more children were the most likely to have a low credit score, making it harder for them to borrow on low interest rates.

Credit Simple chief executive David Scognamiglio said lenders were looking for people who were in a stable position with a good job and education.

The difference between those with none or one child and two or three children was probably linked to the stage of life or age of a person, Scognamiglio said.

"Someone with one kid is probably in their late 20s or early 30s."

People's credit scores typically improved as people got older and the over 65 age group typically had the highest average scores, he said.

During the global financial crisis many people in this age group were able to take advantage of their good credit rating to buy new cars at low finance costs.

Scognamiglio said credit scores tended to head downwards for people with three or more children and those with six or more offspring were likely to have a low score.

People who were married also had a better credit score, although the research only analysed whether a person was married, separated or divorced or never married.

It did not look at people in de facto relationships.

One surprising factor was the high correlation between renting and a low credit score, but Scognamiglio believed that could change over time.

The cost of buying a house meant more people were choosing to rent and it was becoming a way of life which could see it becoming less of a negative factor on people's credit files, he said.

High-scoring factors
• Doctorate
• Married
• Three children
• Professional

Low-scoring factors
• Renter
• Regular smoker
• Six or more children
• Machine operators or drivers