Christmas Is Coming: What To Avoid To Protect Your Credit Score

christmas spending, christmas saving, credit score

How can you avoid a Christmas hangover debt?

christmas spending, christmas saving, credit score

It’s beginning to feel a lot like Christmas! With the holiday season just around the corner, life is about to get much busier and more expensive. So how can you protect your credit score this holiday season?

With Christmas now only one month away, the countdown is officially on! Christmas parties, family gatherings, presents, food and alcohol – the Christmas season can be the most exciting time of the year. For many, it can also be expensive and stressful.

We want you to enjoy this holiday season. 2020 has been a tough year, and we all deserve to let off some steam and have fun. But the celebrations don’t have to come at the expense of your credit score.

The price of Christmas

At the beginning of this year, millions of Aussies started 2020 with a lot of debt, dubbed as a Christmas debt hangover, according to comparison site 

Unfortunately for most of us, the year didn’t get any better thanks to COVID-19. According to data from, 37% of Australians, which equals 7.2 million people or 1 in 3 Aussies, entered into 2020 with Christmas hangover debt which they would have been paying off until the end of February. However, 1 in 5 Australians were forecast to be paying back their Christmas debt up until May 2020. 

Whilst this year’s Christmas period is likely to be less expensive than previous years, this doesn’t mean it’s not going to cost you. With the onset of the coronavirus pandemic, Christmas spending on presents is predicted to be lower this year.

According to a report from IBISWorld, a provider of industry market research, Christmas spending in key product categories is expected to decline this year, including consumer electronics retailing, which is forecast to be down 2.7% this December from last year.

Spending in department stores is also expected to drop by 1.0% year-on-year, and Christmas spending on pharmaceuticals, cosmetic and toiletry goods is forecast to be lower by 1.5%.

However, IBISWorld’s report shows that although spending on presents might be lower this Christmas, Aussies will be making up for it in their grocery and alcohol shopping, which is expected to increase by 2.8% and 3.6% respectively.

“Families are expected to go all-out on their Christmas feasts this year, with many Australians celebrating their ability to reunite with family after states reopen borders and ease social distancing regulations,” said IBISWorld Senior Industry Analyst, Yin Yeoh.

2020 has been difficult enough, and whilst we’re so ready to say goodbye to 2020 – the pandemic is, unfortunately, going to follow us into the new year. So how can we enter 2021 with one less worry and, as a result, protect our credit scores?

Here is a list of things you should try and avoid if you want to enter 2021 without a Christmas hangover debt.

Avoid: maxing out your credit card

2020 has been hard. We get that! Retail therapy has been one of the ways we’ve all been coping with lockdown measures and everything being cancelled. With Christmas just around the corner, our credit cards are likely to get a workout.

But you might want to avoid maxing out your credit card where possible. Because if you do,  you could be in for a world of pain as you might have to deal with extra fees and charges, adding to an already costly time.

More than that, if you reach your credit card limit, then that’s it until you pay your bill, potentially leaving you stranded!

Another reason why you shouldn’t max out your credit cards is because it could hurt your credit score. Just because you have an allocated credit limit, doesn’t mean you should use all of it. Using your full borrowing capacity may affect your credit score and indicate to credit providers that you may be at a higher risk to struggle financially in the future. 

How can you cut costs over Christmas?

So how can you avoid maxing out your credit card during this expensive holiday period? One thing you could do is establish a budget. Decide who you’ll be buying presents for, which events you’ll attend and work out all the costs associated with all of these. The earlier you set up a budget, the more prepared you’ll be. All of this could make all the difference for how you enter 2021.

Another cost-saving technique for the Christmas period is opting for Secret Santa. Whilst traditionally, Secret Santa was something you only did at work. But now, it’s becoming a lot more of a trend among friends and even family. Having to only buy for one person instead of multiple people could make a massive difference in how much you spend for Christmas gifts.

For Secret Santa, you can set a price limit for the gifts – small or large, whatever works for all involved! There are plenty of websites where everyone can register what they’d like from their Secret Santa, which also means you can avoid the stress of getting a gift you know the recipient will really love. Some of these websites even take out all of the work for you and provide you with information on where to find that exact gift for the set price.

Another way you could make Christmas more affordable is by making your own gifts! Something easy but handmade can go a long way for your loved ones as well as your credit card. Not particularly crafty? Never fear! Something as simple as painting a terracotta pot for your friend’s new plant babies they’ve collected over the pandemic could be a really thoughtful and inexpensive gift.

Avoid: relying on Buy Now Pay Later 

Buy Now Pay Later (BNPL) services have well and truly taken Australia by storm, particularly among millennials. In fact, studies have shown that millennials prefer BNPL solutions to actual credit cards. In fact, according to consultancy firm AlphaBeta, from 2004 until 2018, the proportion of young people with a credit card fell from 58% down to 41%. AlphaBeta also found that  nearly 70% of Millennials who use Afterpay were found to use their credit cards less.

Whilst the idea of BNPL services is to allow consumers to break down the price of items into more manageable payments, you should be aware of the psychology behind such services and how it can negatively affect your financial situation.

As highlighted by Mel Browne, Author and Financial Wellness Advocate, the process of using cash – the smell, sound, all of it – causes the insular cortex of our brain to light up and it registers as pain. Credit cards and BNPL services don’t have this same effect, so we’re more likely to spend more.

Whilst there are dangers with credit cards, Browne argues that the risks are even higher with BNPL. If you make a purchase of $100 that’s spread over 4 payments of $25, your brain is likely to process this as only $25 – not $100. Because of this, it hurts less and you might end up spending more. This could then lead to you overspending and struggling to make your repayments.

BNPL is like getting a small loan and it could affect your credit score. While Afterpay will only pull a soft enquiry, Zip will send out a hard request. This could cause your credit score to drop. However, if you default on your repayments, this will show up on your credit report, which will hurt your credit score.

If you do decide to use BNPL services, make sure you’re aware of its risks and most importantly, check whether you can afford the fortnightly instalments. 

Avoid: Missing bills or repayments

If you miss paying your bill or making a repayment on one of your lines of credit within a timely manner, then this is classified as a default. Defaults will last on your credit report for 7 years, and will negatively affect your credit score.

Your repayment history contributes to 30% of your Equifax credit score, holding the most weight behind only the number of credit enquiries you make. Because of this, over the Christmas period, you should be aiming to pay all of your bills and make your repayments on time.

How can you do this? One thing that could make all the difference is setting a budget, which we’ll head to now.

Avoid: Failing to budget

A budget can be useful for many things. Namely, it can help you keep track of your expenses. Do you know what you spend your money on? You would be surprised to find that it’s often the small habits that eat into your savings. You may be getting $80 worth of snacks every month without even noticing. That’s where a budget comes into play. A budget can help you dictate where your money should go instead of mindlessly spending it until it’s gone. 

Once you know what you’re spending your money on, a budget could help you ensure that you have enough money for all of your necessary expenses – your bills and repayments. Without a budget, you might lose track of your debt and not have enough money to meet your obligations, resulting in a default and a black mark on your credit report.

A budget could also be really handy for your savings goals. When you know your average monthly spending, you can make realistic and achievable savings goals. You could even shape your spending habits to maximise the amount leftover which you can put into your savings and set your future self up for success!

Captain obvious here! The way you can avoid failing to budget is… to budget! There are so many ways you can budget and numerous budgeting apps that could help get you started. For a breakdown of all the ways, you can budget, head back to school with Tippla’s Credit School!

Avoid: Neglecting your credit report

We know the holiday season can be a busy period, but that doesn’t mean you should neglect your credit score! Many people don’t realise, but your credit score changes frequently. Credit providers report to credit bureaus once a month, but not necessarily at the same time. So your score can change often, even multiple times a day.

If you check your credit score frequently you could see exactly what influences your score – both good and bad – and take steps to rectify the situation if something you have done has negatively impacted your score.

If you check your credit score, you’re more likely to catch any mistakes on your report early. 1 in 5 credit reports have some kind of mistake on them. Wrongly listed information could cost you valuable points. That’s why it’s important to check your information frequently to catch mistakes early on.

Start 2021 on the right footing

If you want to start 2021 on the right footing #newyearnewme, then one of the best ways to do this is to avoid bringing your Christmas hangover debt into the new year. There are a number of ways you could do that – don’t max out your credit cards, check your credit report, budget, be careful with your BNPL spending and more!

There are also a number of ways to save money over Christmas, such as making your own gifts, doing Secret Santa this year with your family or setting price limits on gifts for friends or family. 

2020 was a hard year. Let’s try and make 2021 easier with these tips and tricks!

How Does Bankruptcy Affect Your Credit Score?

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bankruptcy credit score

Bankruptcy – it’s a word that you’ve very likely heard before, but you can be forgiven for not knowing much about what bankruptcy actually is or how bankruptcy will affect your credit score and your ability to apply for credit.

Effectively managing debt is an important issue to discuss, especially here in Australia. In 2016, the average Australian household debt was $168,600, with 29% of households holding more debt than they are able to repay. Financial stress has also been identified as one of the key problems in relationships.

What is bankruptcy?

When debt gets out of control, it can lead to bankruptcy. So what is bankruptcy exactly? As explained by the Australian Financial Security Authority, the government agency that manages bankruptcy for individuals, bankruptcy is the legal process when you’re declared unable to pay your debts.

In Australia, an individual can enter into bankruptcy in two ways. You can enter into voluntary bankruptcy by completing and submitting a Bankruptcy Form. Or, a creditor can petition to have you enter a bankruptcy agreement through court proceedings, referred to as a sequestration order. Bankruptcy normally lasts for 3 years and 1 day. However, it is possible to get out of bankruptcy earlier.

Bankruptcy is a scary term. Most of us haven’t had to go through bankruptcy before, but there are still plenty of people who have had to go through some kind of personal insolvency in Australia.

Bankruptcy in Australia

According to figures from the AFSA, in the 2019-2020 financial year, there were 20,762 new personal insolvencies, which refers to people in bankruptcies, debt agreements and personal insolvency agreements. This is lower by 23.3 per cent when compared against the previous financial year.

During this period, there were 12,450 bankruptcies, with Australia recording a drop across all of its states and territories 

bankruptcy in australia

Bankruptcy vs personal insolvency agreements vs debt agreements

We just threw a lot of technical terms at you: bankruptcy, personal insolvency and debt agreements. So let’s break this down a bit. Personal insolvency and debt agreements are two agreement types you can enter into with your creditors and can be done as a measure to avoid bankruptcy.

A personal insolvency agreement (PIA), also known as a Part X (10) debt agreement, is a legally binding agreement between you and your creditors. It can be used as a way to arrange to settle your debts with creditors without becoming bankrupt.

If you enter into a Part X, a trustee will be appointed to take control of your assets and make an offer to your creditors on your part. This offer might be to pay all or part of your debts either in instalments or a lump sum, depending on your financial situation.

Debt agreements, or Part IX (9) debt agreement, on the other hand, are a legally binding agreement between you and your creditor. This agreement can be a flexible way for you to reach an arrangement with your creditors to settle your debts without becoming bankrupt.

In essence, if you enter into a debt agreement, your appointed debt agreement administrator will negotiate to pay back part of your combined debt – whatever you can afford, over an agreed period of time. Once you complete the payment and the agreement ends, then your creditors can’t recover the rest of the money that you owe.

How does bankruptcy affect your credit score?

The exact formula credit bureaus use to calculate your credit score is a well-guarded secret. In saying that, we do know that going into bankruptcy won’t be good for your credit score, as it sends a clear signal that you weren’t able to effectively manage your debt.

Specifically, your report will show your bankruptcy for either:

  • 2 years from when your bankruptcy ends or;
  • 5 years from the date you became bankrupt (whichever is later).


As highlighted by the AFSA, bankruptcy will remain on your credit report for a maximum of 5 years, assuming your bankruptcy period lasts for 3 years and 1 day. The bankruptcy status will change on your report depending on whether you completed the agreement within the 5 years. If you complete your bankruptcy, the status on your credit report will change to “discharged’. If you complete your bankruptcy agreement before the 3 year and 1 day period, then the bankruptcy will be displayed on your credit report for less than 5 years.

The impact of bankruptcy

Whilst going bankrupt isn’t the end of the world, it can still have a severe impact on numerous aspects of your life, including your ability to borrow credit. Think of bankruptcy as a last resort. There are numerous avenues you could explore first, such as a Part IX or Part X agreement, which should allow you to avoid bankruptcy altogether. 

Furthermore, credit providers are required to have hardship policies in place to help you if you are in a bad financial situation. If you are experiencing hardship, it could be worthwhile to reach out to your credit provider first and try to come to an agreement.

In general, once you start the bankruptcy process, your credit score will be negatively adjusted. It will also show on your credit report that you are currently going through bankruptcy. The standard period for completing a bankruptcy agreement is 3 years and 1 day, whereby it will remain on your credit file for an additional two years. 

Once you complete the bankruptcy, the status of your bankruptcy will be changed to “discharged” on your report. It will remain this way for an additional two years, before being removed from your report. After completing your bankruptcy agreement, and the status changes on your report, your score might be adjusted positively.

However, it is important to highlight here that although a bankruptcy will last on your report for a maximum of 5 years, once you enter into bankruptcy, you will be added to the National Personal Insolvency Index (NPII). The NPII shows details of insolvency proceedings such as bankruptcy in the country.

Applying for credit after bankruptcy

Can you still apply for credit when you’re bankrupt? Technically you can still apply for credit even during the bankruptcy process, however, it is completely up to the credit provider as to whether they will give you a loan. 

Bankruptcy indicates to them that you are not able to effectively manage your debt and you are a high-risk borrower. If you have entered into some kind of debt agreement, there might be a condition of your agreement that states you can’t apply for additional credit. If this is the case, then you can’t apply for credit until the debt agreement has been completed. 

In Australia, for anything above $5,788, you must disclose that you are bankrupt or in a debt agreement before you can buy goods or services on credit, unless there are specific clauses in your contract that state otherwise. After your bankruptcy has ended, all restrictions on applying for loans or credit are lifted. Then, it’s up to the credit provider to decide if they will take you on as a customer.

Getting approved for credit

So what might help you get approved for credit after bankruptcy? Again, this is completely dependent on the type of credit you are trying to get approved for, and the provider’s internal policies. 

If you can show that your financial situation has changed and you are now able to effectively manage your debt and have overcome your bad habits, this could go a long way for a creditor. Good banking habits, such as no dishonours and no overdrawn accounts, could also go a long way.

It is worth pointing out here that if you have applied for bankruptcy or are in the process of establishing a debt agreement, but it has not yet been accepted or finalised, you can’t apply for credit. Applying for finance during this period could be construed as fraud.

Bankruptcy and COVID

The impact of COVID-19 has been felt around the world, with the global pandemic affecting almost every aspect of our lives. This extends to bankruptcies. In the wake of coronavirus, the Australian government implemented temporary debt relief measures on the 25th of March 2020 to support individuals and businesses.

The temporary debt relief measures include:

  • Six-month temporary debt protection;
  • Changes to bankruptcy notices;
  • Impacts on people who are currently bankrupt.

You can see all the information on the temporary relief measures on the AFSA’s website. To summarise the main points, the temporary debt protection period for people in financial difficulty has been increased from 21 days to 6 months. During this 6 month period, unsecured creditors are prevented from taking recovery action.

The protection period allows individuals and businesses to seek advice from a free financial counsellor, negotiate a payment plan with creditors, or consider if any formal insolvency options are the right course of action.

As part of the relief measures, there have also been changes to bankruptcy notices. As part of this, the debt threshold required for creditors to apply for a bankruptcy notice against a debtor has increased from $5,000 up to $20,000.

The debtor, AKA the person in debt, then has 6 months to respond to the bankruptcy notice, as opposed to the normal 21 day period. 

Am I eligible for bankruptcy?

If you are in significant financial hardship, you might be wondering “am I eligible for bankruptcy?” There are two requirements you need to meet in order to apply for bankruptcy:

  1. You’re unable to pay your debts when they are due (insolvent) and;
  2. You’re present in Australia or have a residential or business connection to Australia.

In Australia, there is no fee to apply for bankruptcy and there is no minimum or maximum amount of debt or income needed to be eligible.

Before entering into bankruptcy, you should speak with a free financial counsellor via the National Debt Helpline on 1800 007 007. The AFSA has also put together a list of support services for you to access before entering into bankruptcy here.

Who will know you’re bankrupt?

Not everything goes to plan in life. If bankruptcy is unavoidable, then who will be able to see that you’ve gone bankrupt? Unfortunately, your name will permanently appear on a public register called the NPII. The NPII shows details of insolvency proceedings such as bankruptcy in the country.

Generally, the information available on the register will include:

  • Your name, date of birth, residential address and occupation that you disclose on the bankruptcy application;
  • Previous names and aliases, if known and applicable;
  • The type of proceeding, the start date and your AFSA administration number;
  • The name and contact details of the appointed trustee or administrator;
  • The current status of the proceeding, such as whether you have been discharged from bankruptcy.

You can request your details to be hidden from the NPII if you have been the victim of domestic violence or apprehended violence and have been granted an order to protect you, or if you are in a witness protection programme. It is up to the AFSA as to whether your details will be hidden.

Managing debt

One of the ways to avoid bankruptcy is to effectively manage your debt. There are numerous ways you can stay on top and effectively manage your debt. First things first – it’s important to know your financial situation. Being across how much you owe, when your repayments go out and how much of your income is spent on debt repayments could be the difference between financial wellbeing and financial strain.

Once you’re on top of your situation, other ways to help yourself effectively manage debt could include setting up a budget and thoroughly doing your research before taking on any credit to ensure you will be able to make the repayments. Cancelling non essential services, such as your multiple streaming services, could help increase your available discretionary income. 

You could also establish an emergency fund should an unexpected expense or event occur that leaves you without a consistent income or a big bill to pay.

Check your credit scores frequently to make sure you know where you’re at. It’s also a good idea to keep an eye out for any mistakes, and make sure any statuses on defaults and bankruptcy are correct. Once you start repaying your debt, you may see them rise over time. Don’t forget to celebrate your small successes! 

Want to learn more?

Unfortunately, they don’t teach you about your credit score in school. But it’s never too late to learn! Sign up to Tippla’s free Credit School, where you can learn all the ins and outs of your credit score, including how to improve your rating. Embrace your inner finance geek and go back to school!

At Tippla we’ll always do our best to provide you with the information you need to financially thrive, but it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any final decisions.

Tippla got a makeover – we’re back, and we’re better than ever!

tippla dashboard, tippla, tippla changes

Tippla has rebuilt its platform from scratch, to give you the best service to improve and understand your credit scores.

tippla dashboard, tippla, tippla changes

Tippla has gotten a makeover, and it’s looking better than ever! We’ve been working tirelessly on some exciting new features and developments. Now we’re back, and we’re better than ever (if we do say so ourselves)!

Since our initial launch earlier this year, Aussies like yourself have been using Tippla to access and improve their credit scores as part of their journey to financial wellbeing. Whilst you’ve been part of the Tippla family, we have been listening to your suggestions and we have taken them on board. The result? A bigger and better Tippla!

So what’s changed? You asked, and we answered – Tippla is free!

Tippla is free

Yes, you read that right, Tippla is now free to use. We have scrapped the small subscription fee so that you can stay on top of your credit scores without any cost whatsoever. We strongly believe that financial wellbeing is for everyone, so we’re stoked that we can now offer our service free of charge whilst still offering a high-quality solution that will help you on your path to financial stability.

But wait – there’s more! Not only is Tippla free, but your dashboard is now easier than ever to use.

Check out the changes for yourself!

Do you want more? We’ve got you covered! Here at Tippla, we believe that knowledge is power. The more you know about your credit scores, the more on top of your financial situation you will be.

Go back to school

It’s time to go back to school! We have revamped our Credit School – a free online short course that will provide you with all the information you’ll need to improve and maintain your credit scores.

Across the six dedicated lessons, you’ll learn about your credit score – what affects it, what goes into your credit report, as well as tips and tricks on how to improve your credit score and get access to more opportunities. So what are you waiting for? Reconnect with your inner finance geek!