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How to Report Credit Card Fraud: Protect Yourself and Your Credit Score

report credit card fraud

Fraudsters are adopting more sophisticated methods to steal your card details. Tippla has put together a guide on how to protect yourself and your finances, and, if the worst should happen, report credit card fraud.

report credit card fraud

As technology advances, you don’t need to only worry about someone stealing your credit card out of your bag. But also that your details might be stolen online. So how can you protect yourself from and report credit card fraud if you do fall victim?

What is credit card fraud?

Let’s start by going over what is credit card fraud. As outlined by Experian, credit card fraud is “when someone uses your credit card or credit account to make a purchase you didn’t authorize”.

This could happen in many ways. A thief could steal your physical credit card and use it to make purchases. Alternatively, scammers could steal your details online, such as your credit card number, PIN and security code. With these details, they can make purchases online without having your physical card. 

Types of credit card fraud

Credit card fraud comes in many shapes and sizes. Sometimes the fraud is physical, for example, they steal your credit card from your wallet, or the scam is online. This is referred to as card-not-present (CNP) fraud.

Here’s an overview of the different types of credit card fraud:

Credit card theft – when someone steals your credit card from your wallet, bag, car – wherever you keep it;

Using lost or stolen cards – say you dropped your credit card somewhere, and an opportunist picks it up. They proceed to use your card as if it was their own instead of reporting it to police;

Counterfeit cards – counterfeit credit cards are physical cards that were created with real account information that has been stolen from victims using a device called a “skimmer”. Often, the victims still have their real cards, so they’re not aware that their details have been stolen.

Intercepting and using mailed cards – when someone orders a new credit card and it’s sent to their address in the mail, fraudsters will steal this mail and use the card. Whilst credit card companies do their best to protect the cards during transit, they can be stolen from your mailbox.

Account takeover – as the name implies, account take over is when someone takes over your account. They could do this by getting your address and basic information and learn some of your security questions, such as your mother’s maiden name. Once they have this information, they’ll call up your bank or provider and change the account details. They might change the address, so a new card is sent to their address and not your own.

Fraudulent applications – using your details, such as your name, date of birth and address to apply for credit cards in your name.

CNP – card-not-present fraud is when scammers steal your details when you pay for something online. For this type of fraud, they only need basic information such as your credit card number and name to execute the fraud.

Credit card fraud in Australia

Although credit card fraud is an issue in Australia, there is an encouraging declining trend. According to figures released by the industry self-regulatory body Australian Payments Network (AusPayNet), fraud on payment card transactions dropped by 15.4% to $447.2 million for the 12 months to the 30th of June 2020. This continued the declining trend recorded in the previous year.

CNP fraud, which is when someone’s credit card details are stolen online and used in mainly online transactions, fell by 14.0% year-on-year down to $392.4 million.

Even though these figures are encouraging, that’s not to say that credit card fraud isn’t a real threat. 

Credit card fraud vs identity theft

Identity theft is a type of fraud where someone uses another’s identity to either steal money or gain some kind of benefit. Credit card fraud is a type of identity theft. This is because the scammers are using your credit card details to make purchases without your consent.

As outlined by the Australian Competition and Consumer Commission’s (ACCC) scam statistics website Scamwatch, common methods of identity theft include phishing, hacking, remote access scams, malware and ransomware, fake online profiles, document theft and data breaches.

How to tell if you’re a victim of credit card fraud

The Australian Federal Police outlines the following ways you can identify if you have been a victim of identity theft:

  • Items have appeared on your bank or credit card statements that you don’t recognise;
  • You applied for a government benefit but are told that you are already claiming;
  • You receive bills, invoices or receipts addressed to you for goods or services you haven’t asked for;
  • You have been refused a financial service, such as a credit card or a loan, despite having a good credit history;
  • A mobile phone contract has been set up in your name without your knowledge;
  • You have received letters from solicitors or debt collectors for debts that aren’t yours.

How to report credit card fraud

Credit card fraud can happen even when your card is still in your wallet. Therefore, it’s a good idea to monitor your credit account to see if there are any suspicious transactions.

If you discover there are purchases on your credit account that you haven’t authorised, then you might be a victim to credit card fraud. If that’s the case, here’s what you should do:

Alert your credit card company

The first thing you should do if you discover you’ve been subject to credit card fraud is to immediately contact the credit card company and alert them to the fraudulent activity. They should put a hold on your account so the fraudsters can’t make any more purchases, and reimburse you the money. 

Change your online passwords and PINs

Once you have alerted your credit card company or bank to the fraud, you should log into your account and change your online banking password and PIN. Password managers can help you create complex passwords that are hard for fraudsters to crack. You might want to consider using one of these to help create a strong password and prevent further fraud.

Check your credit report

Your credit report can be a valuable resource to help you detect credit card fraud and identity theft. Your credit report outlines all of the different credit accounts you have. If you check your report and see that you have credit accounts open that you never authorised, then you might be a victim of credit fraud.

If you have been a victim of fraud, then you should contact the three credit reporting agencies in Australia. These are Equifax, Experian and illion. You should report the fraud to each of these credit bureaus. You can ask them to place a ban on your consumer credit information.

Placing a ban on your consumer credit information can help prevent fraudsters opening accounts in your name. During the time the ban is in place, credit providers won’t be able to view your credit report without your written permission. Credit providers can’t open up an account without viewing your report.

You can also add a fraud alert to your credit report with each of the agencies. This means you will receive a notification when certain changes happen to your credit file.

Report credit card fraud to the police

If you are a victim of fraud, you should report credit card fraud to the police. If your details have been stolen online, you can report the fraud via ReportCyber on their website here. You can also call the following number: 1300 292 371.

How to protect yourself from credit card fraud

As the saying goes, prevention is better than cure. Here are some things you could do to protect yourself from falling victim to credit card fraud.

Keep your wallet or purse secure at all times

Whilst online scams are a real threat, thieves can still steal your credit card from out of your bag. When out in public, you should keep your wallet or purse secure at all times to stop it from being stolen.

Shred financial documents before putting them in the bin

The Australian Federal Police recommends shredding any personal or financial papers before you throw them away, so people can’t access your details. Alternatively, you should keep them in a secure place if you want to retain them.

Be careful when using your card

When you’re out in public, you should always cover the keypad at ATMs, to stop strangers from viewing your pin. The same goes for when you’re entering your pin on EFTPOS terminals.

You should also be aware of your surroundings and keep an eye out for anyone trying to watch you. Sometimes, scammers might try and attach technology to the ATM or EFTPOS terminal to scan your details. You should look out for any strange or loose fixtures attached.

For extra protection, you can ask your bank or financial institution for a credit or debit card with an embedded microchip. These are more secure than cards that only have magnetic stripes.

Be mindful of where you provide your details

When you’re shopping online, you should be mindful of where you provide your details. You should only buy from reputable companies or from ones whose security measures you can verify.

One method you can do is look at the company’s web address. With the https the “s” indicates that the site is secure.

On the other side of this, if you’re using a public computer, such as an internet cafe, or using an unsecured wireless connection (AKA a hotspot), avoid doing your internet banking or making payments.

Furthermore, you should be cautious of who you provide your personal and financial information to – both online and offline. 

How can credit card fraud hurt your credit score?

Your credit report details all of your current credit accounts, as well as any credit you’ve had over the past two years. The impact fraud will have on your credit score, however, depends on what the scammer does with your details.

If they max out your credit card, this will hurt your credit score, as it indicates that you’re not responsible with your finances. If they make multiple applications in your name, this could also harm your rating.

However, it is important to highlight that although credit card fraud can hurt your credit score initially, once you alert the credit reporting agencies to the fraud, they will remove the fraudulent accounts or transactions and your credit score will revert to what it was.

Keep a watchful eye

Although credit card fraud might be on the decline in Australia, it remains a real threat for Aussies across the country. Even if you do all of the right things you could still become a victim to fraud. Constantly checking your accounts, prioritising your online security and knowing how to report credit card fraud could help you reduce the damage if your details are stolen.

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How To Pick The Right Loan For You: A Quick Guide

Are you currently looking for a loan, but you’re not sure where to start? You’re not alone! Here’s a helpful guide to get you started.

When it comes to the world of finance, you’re not alone if you feel a bit lost. Nowadays there are so many types of loans and finance options, you can be forgiven if you’re not sure which loan you should apply for. Today, we’re answering the question: how to pick the right loan for you.

Before you apply for a loan

Before you apply for a loan, one of the most important things you should check is whether you can afford the repayments. Depending on your loan type, this will usually be a fixed weekly, fortnightly or monthly cost. If you’re getting a loan, whatever the purpose, it should not put you in financial strain. If you’re unsure of whether you can afford to take on a loan, you could reach out to a financial counsellor.

Below are some more things you should consider before you apply for a loan or some kind of finance.

Identify your purpose

Before you take on a loan, it’s important to know why you need money. Do you need a loan to cover unexpected expenses, help out with the bills, make a big purchase, study, buy a house, buy a car? The options are endless.

Once you’ve identified why you need a loan, then it can narrow down your search significantly. If you’re wanting to buy a house, then you’re in the market for a home loan. If you want to buy something personal or cover unexpected expenses, then that would be a personal loan.

Know your loan options

In Australia, there are so many different types of loan options, and companies willing to offer Aussies finance. Before you jump in headfirst and apply for a loan, it is worth knowing all of your options.

Here’s a list of some of the different types of loan options:

  • Personal loans
  • Mortgages
  • Car loans
  • Debt consolidation loans
  • Student loans
  • Business loans
  • Home equity loans

Personal Loans 

Personal loans come in many forms and can be used for multiple purposes. As the name implies, personal loans are used for personal expenses. Perhaps you need to cover unexpected costs, you want to improve your home, the list is endless.

Whilst personal loans are generally easier to get than other loans, you still have to sign a loan agreement. For this loan type, there are two main forms of personal loans – unsecured and secured.

Mortgages 

A mortgage is a form of personal loan that is secured against the property you buy with it. A bank or credit union will approve a loan with set repayments plus interest over a longer period of time. Home loans are usually set for 30 years. 

There are two main types of mortgages – a fixed-rate mortgage and a flexible rate mortgage. A fixed-rate mortgage is when the interest rate is fixed for a select period of time, usually 1 year. A flexible rate mortgage means that the interest rate is flexible and will change throughout the lifetime of your mortgage.

Car Loans 

Car loans are a specific form of a personal loan to buy a car. Often, this loan isn’t paid out directly to you. Instead, they can be paid to the dealership that you closed your car deal with. 

In most cases, a car loan is secured against the car you are purchasing. This can help you to get a lower interest rate and better loan terms. However, if you can’t make your repayments, you are at risk of losing your car. 

Debt Consolidation Loan 

If you have accumulated debt from multiple sources, you may consider consolidating your debt into one loan. A debt consolidation loan combines all your current debts into one single debt with one interest rate and one repayment date. You may be able to get an overall better interest rate and save some money along the way. 

Whether a debt consolidation loan is right for you completely depends on your existing credit terms and conditions. In some instances, consolidating your debt could mean that you are paying higher interest rates, which means you’ll end up paying more in the long-term. You might also incur extra fees (establishment fees, fees for paying off your other debt early, etc). This is something to watch out for.

Student Loans 

Student loans often come with low-interest rates and can be considered an investment in your future. They often come with long loan terms and smaller repayment amounts over a longer duration. 

Business Loans 

A business loan is a form of loan given to help with business operations. This could be linked to a specific purchase or to provide cash flow in the first years of operation until the business is making a profit. Business loans are often big amounts of money linked to a business plan. They may be secured against assets or your business itself.

Home Equity Loans 

Even while you are still paying for your home, you can make use of its value by taking on a so-called equity loan. The value of your property that you have already repaid can be used to take on new credit. Because it is secured against your property, home equity loans come with lower interest rates and provide good security to creditors. 

Compare loans

Now that you know why you want a loan, and what’s available, it’s a good idea to compare all your options. If you’re looking for a personal loan, then you could look at several options and try and find the one with the best terms for your situation.

If you want to limit the negative impact on your credit score, then you should try and not apply for too many loans. This is because, when you apply for a loan, the lender will take a look at your credit score, to see how risky of a borrower you are. This check is recorded on your credit report as a hard enquiry and it will usually impact your credit score.

As outlined by Equifax, “Hard inquiries serve as a timeline of when you have applied for new credit and may stay on your credit report for two years, although they typically only affect your credit scores for one year.”

Because of this, you could protect your credit score by doing your research first and compare loans to find the best one for you.

Know your credit score

As a follow on, it’s important to know what your credit score is. If you have a good credit score, then you could get access to better loan terms, such as lower interest rates, as your credit score indicates to lenders that you are a low-risk borrower and likely to make your repayments.

If you know your credit score isn’t good, then it might be worth taking the time to improve your credit score before applying for a loan. Not only could a good credit score be the difference between being rejected or accepted for a loan, but it could save you money in the long run.

One of the first things you should do if you want to improve your credit score is to check your credit report for any mistakes. 1 in 5 credit reports in Australia have some kind of mistake on them, and that mistake could be hurting your credit score!

As we highlighted in a recent article, there are numerous ways you can repair your credit report and fix your credit score. Want to hear some good news? Fixing your credit score is free, and you can do it yourself.

How to pick the right loan

With so many loan options out there, it can be hard to know how to apply for the right loan for you. If you can identify why you’re getting a loan and compare your options before applying for a loan, then you could be setting yourself up for a more successful experience, and save your credit score and bank account from unnecessary harm.

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Credit Repair Companies: Are They Worth It?

In life, there’s rarely a quick fix. The same can be said for your credit score. You should be wary of any credit repair company promising to fix your credit score in a short amount of time.

If you have found a mistake or an issue on your credit report, you might be trying to find out how to repair your credit report and, as a result, improve your credit score. During your search for answers, you may have come across credit repair companies. But what are credit repair companies and are they worth it?

Credit repair companies often promise to fix your credit score by fixing issues on your credit report for a fee. They usually promise fast results and high approval rates. Whilst this might seem like a great deal, unfortunately, the age-old saying comes into play here – if it sounds too good to be true, it probably is.

Credit repair companies in Australia

In Australia, there are a number of companies promising fast credit report repair or guarantee to fix your credit score in no time at all. However, we’re here to let you in on a secret – most of the quick fixes these companies promise to do are actually things you could do yourself, and for no cost whatsoever. 

In some instances, however, there might not be a way to fix your credit score overnight. But, that doesn’t mean it can’t be done! As the saying goes, good things take time.

Should you use a credit repair company?

The tricks credit repair companies use to improve your credit report, are actually things that you can do yourself, and for free! So whilst a credit repair company might be able to improve your credit score and repair your credit report, you’re most likely just paying someone to do something you could do for yourself!

In the end, it’s always up to you. But, we’ve put together a short guide on how you can repair your credit report for free!

How to repair your credit report

Your credit score is an important number. It can be the difference between you being approved or rejected for a loan, a rental apartment, utilities and more. Your credit score is a 4-digit number ranging from 0 to 1,200. This number is based on your credit report which details information on your credit history – your credit accounts, credit applications, repayment history, defaults and more.

If you have a below-average credit score, then it might affect the loans and credit you apply for. Not only could a poor credit score result in you being rejected for finance, but it could also mean that you only have access to loans with higher interest rates and fees, which will cost you more in the long run!

1 in 5 credit reports contain some kind of mistake on them. These mistakes can damage your score. In Australia, you have a right to get any mistakes on your report fixed for free, and this is something you can do yourself.

Common mistakes on your credit report

Now you know that you can actually fix mistakes on your credit report for free, let’s take a look at some of the most common mistakes Aussies find on their credit reports.

Generally speaking, there are two types of mistakes made – those made by the credit reporting agency, which in Australia is either Equifax, Experian or Illion, or mistakes made by the credit provider. Your credit provider might be the company you have taken out a loan with, the bank that provided you with a credit card, or the financial institutions you applied for finance with.

When it comes to the credit reporting agencies, most often, they might have recorded your information incorrectly on your report, such as your name, date of birth or address. Furthermore, you might find that your debt – ie. a loan or credit card limit, has been listed more than once, or the amount of the debt is wrong.

When it comes to errors made by the credit provider, the Australian Securities and Investments Commission’s (ASIC) Moneysmart, highlights the following common mistakes:

  • Incorrectly listed that a payment of $150 or more was overdue by 60 days or more;
  • Did not notify you about an unpaid debt;
  • Listed a default (an overdue debt) while you were in dispute about it;
  • Didn’t show that they had agreed to put a payment plan in place or change the contract terms;
  • Created an account by mistake or as a result of identity theft.

How to fix mistakes on your credit report

If you’ve taken a look at your credit report and you’ve spotted a mistake, what should you do next? If the change is about your personal information rather than about enquiries or accounts, then it’s likely a mistake from the credit reporting agency. You can directly contact your credit bureau and request a change. 

If the mistake is regarding accounts or enquiries, you can contact your credit provider directly and ask them to change the entry. After investigating, the credit provider will then report back to the credit bureau and the change will become visible on your report. 

If you can’t resolve the issue, you can contact a free financial counsellor to mitigate, or directly reach out to the Australian Financial Complaints Authority (AFCA). However, you should try and solve this on your own terms first. 

Improve your credit score

If your poor credit score hasn’t been caused by an error on your credit report, never fear! There are still plenty of other ways you can improve your credit score. We recently put together a quick guide to help you fix your credit score.

Before we give you tips on how to improve your credit score, it’s important to understand what goes onto your credit report and how long certain events stay on your report.

  • Credit accounts – any open credit accounts and accounts that have been closed in the past two years
  • Credit enquiries –  5 years 
  • Repayment history – for 2 years 
  • Defaults – 5 years 
  • Court judgements – 5 years
  • Bankruptcies – at least 5 years 
  • Serious credit infringements – 7 years 

Watch your credit applications

You might not realise it, but making multiple applications for credit, such as applying for multiple loans at once, can be damaging to your credit score. This is because each time you apply for credit the company you have applied to will check your credit report to see how risky of a borrower you are. This check registers as a hard enquiry on your credit report and can harm your credit score for a period of time. The more applications you make, the more damage you’ll do to your credit rating. 

Not only will multiple hard enquiries lower your credit score, it could also lead to you being rejected for a loan or other types of credit. Think of it from the perspective of a lender. You’ve just applied for a loan and they want to see if you’re a risky borrower. They check your credit score and see you’ve applied for multiple loans all at the same time. This could imply to them that you’re in financial distress, which means, you’re more of a risk. As a result, the lender could reject your application or provide you with the loan with a higher interest rate and fees – which will cost you.

Make your repayments on time

Your repayment history has a lot of weight when it comes to your credit score. This is because your rating is based on how well you can manage your debt. If you consistently pay your bills and make your credit repayments on time, then this is a clear demonstration that you are responsible with your debt, and therefore, a reliable borrower.

Let your credit accounts get old

This might seem strange at a first glance, but the age of your credit account can contribute positively to your credit score. The older the account, the better it is for your rating, as it demonstrates that you can consistently handle a line of credit.

Another way you can improve your credit score is by keeping your credit accounts open. Whilst we’re not advocating that you keep multiple credit accounts open just for the sake of it, you might want to consider keeping some open and in use so credit reporting agencies have data to base your credit score on.

Credit repair companies: are they worth it?

If you’re wanting to repair your credit report and fix your credit score, then this is generally something you can do yourself for no cost whatsoever. Because of this, whilst credit repair companies might be able to help you, anything that these companies are promising to do, are also things you could do yourself.

At the end of the day, the decision is yours. But it’s good to have all of the information on hand so you can make an informed decision. If you’re ever unsure, you can reach out to a free financial counsellor who can help you make the best decisions for your current situation.

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New Year, New Credit Score: Take Control of Your Credit

The new year is upon us. It’s time to embrace the #newyearnewme motto and take control of your credit score and boost your rating.

2020 will definitely go down as an interesting year in history, especially here in Australia. We started off the year with bushfires, then COVID-19 swept in, forcing us all into lockdown, and just so we could experience the full spectrum – we closed the year with floods in some parts. 

Although COVID-19 is still with us, 2021 can still serve as a fresh start – especially for our credit scores. So, how can we use the new year to get on top of our credit scores, and ultimately, improve our financial situation? We here at Tippla have put together a few ideas.

Check your credit score

Before we can even begin to improve our credit scores, you need to first know what your credit score is. A lot of people ask us, “how can I check my credit score?”. Unfortunately, there’s not a lot of education in Australia on what your credit score is, and how you can check your credit score. That’s why Tippla is here to help!

When you sign up to Tippla, you can see what two of your credit scores are – one from Equifax and the other from Experian. It’s important to know where you’re at before you start trying to make changes.

You can also contact the credit reporting agencies in Australia directly for a copy of your credit report. In Australia, there are three reporting agencies – Equifax, Ilion (CheckYourCredit), and Experian.

What is a good credit score?

Once you log into Tippla, you’ll see two separate numbers ranging from 0 to 1,200 – these are your credit scores. Your credit scores are categorised on a five-point scale, ranging from below average, all the way to excellent. 

So, how can you know if you have a good credit score? Here’s how Equifax and Experian rank your credit scores.

Understand your credit report

After you’ve checked your credit score, it’s important to understand why you have achieved your given ratings. Whether you’ve received a below-average rating, all the way up to excellent, there is a reason as to why.

If you have a below-average rating, firstly, never fear – there are many ways you can improve your credit score. In fact, Tippla recently put together a quick guide on how you can fix your credit score. 

There are a number of things that can damage your credit report – defaults on your credit repayments, too many credit applications, too many loans, and more. 

How long does it take to improve your credit score?

Unfortunately, you can’t improve your credit score overnight – but it definitely can be done! The main ingredient that can help you improve your credit score is time. Mix in some consistent positive credit behaviour and you have the perfect recipe for a better credit score.

But how much time are we talking about here? Well, there’s no set time limit for how long it will take. It completely depends on each individual situation and if there are any significant negative entries.

The good news is that even significant negative entries will age over time and get progressively less powerful. However, for most of them, it takes up to 7 years until they fully disappear. 

Here’s what stays on your credit report and for how long:

  • Credit accounts – any open credit accounts and accounts that have been closed in the past two years
  • Credit enquiries –  5 years 
  • Repayment history – for 2 years 
  • Defaults – 5 years 
  • Court judgements – 5 years
  • Bankruptcies – at least 5 years 
  • Serious credit infringements – 7 years 

To help you fix your credit score, here’s a helpful article Tippla put together outlining the dos and don’ts of credit.

Identify your bad habits

Now it’s time to identify your bad credit habits. A bad credit score can have numerous consequences, such as your loan application being rejected, higher interest rates and premiums, and a number of other implications.

Before you can improve your credit score, you need to identify your bad habits. We’ve put together a list of the most common offenders below.

Defaults

A default is when you don’t make one of your repayments – whether that’s for a loan, a credit card, or even your electricity bill. A default is generally when you haven’t made the repayment within a timely manner and you haven’t made arrangements with your credit provider to defer the payment or set up some kind of payment plan.

As outlined by the Office of the Australian Information Commissioner, a credit provider can list a default on your credit report if:

  • the payment has been overdue for at least 60 days;
  • the overdue payment is equal to or more than $150;
  • a notice has been sent to your last known address to let you know about the overdue payment and requesting payment;
  • a second notice was sent at least 30 days later to let you know that if you don’t make a payment the credit provider intends to disclose the information to a credit reporting body;
  • the credit provider must wait at least 14 days after issuing the second notice before listing the default.

Defaults can leave a big mark on your credit report and generally take 5 years to disappear from your credit report. This means, any time you apply for a loan or some kind of credit, the provider can see that you previously defaulted on your repayment. This could lead to them rejecting your application, as you’re deemed too high of a risk.

If you have been rejected for a loan, Tippla recently put together a step-by-step guide on what you can do next and how you can harness your credit score for good.

If there are any defaults on your credit report, then it might be worth reflecting on why you defaulted on your repayment.

Preparing for life’s curveballs

Life throws us curveballs, and sometimes, this can put us under financial strain. It doesn’t make you a bad person if you are in financial hardship. But one way to protect yourself from defaulting on payments could be an emergency fund.

Having an emergency fund in place could be a good way to protect yourself from life’s unexpected challenges. It’s totally up to you how large your emergency fund is. The general rule of thumb is to have enough money set aside that could support you for a three month period.

It’s OK if you don’t have that money available now. You don’t have to rush. You could set up a savings account and slowly save towards your goal. If you want to take it easy, you could start with the goal of saving one month of income as a safety buffer. Once that is achieved, you could then save your way towards three months. 

Too many credit applications

When you apply for credit, whether it’s a loan, credit card, or another type of credit, it will show on your credit report as a hard enquiry. When it comes to your credit report, there are two types of enquiries made – soft and hard. 

A soft enquiry does not impact your credit score and generally occurs when you check your own credit score or when a promotional credit offer is provided to you.

Hard enquiries, on the other hand, are done when you apply for some form of credit, such as a loan or credit card. Your chosen credit provider will take a look at your application and, in order to assess how risky of a borrower you are, will look at your credit score.

Therefore, a hard enquiry on your credit report indicates that you have recently applied for credit. They serve as a timeline to show when you’ve applied for credit and could stay on your report for two years. Typically, however, they only affect your credit score for one year.

If you have multiple hard enquiries on your credit report in quick succession, then a potential lender or credit provider might think you’re in a bad financial situation in desperate need of finance, regardless of whether this is the case. This could lead to them rejecting your application, as they might feel you’re too risky of a borrower. This is why it’s important to limit your hard enquiries.

Too many types of credit

The subtleties of your credit score can be confusing and keeping your score healthy can be a delicate balance. Whilst you need to have had some kind of credit in your life in order to have a credit history and credit score, having too much, however, can work against you.

Similar to having too many hard enquiries on your credit report, having too many lines of credit can make it appear as if you are in financial distress. If you have multiple loans or multiple credit cards, it could give off the impression that you are struggling financially, or you’re not able to effectively manage your finances. 

This could make a lender or credit provider deem you as a higher risk and make them less likely to lend you money or increase your interest rates to hedge against the perceived risk. One way you could counteract this is by only taking on finance when you need it, and if you are already repaying off one loan, to not take out a second, for example.

If you’re unsure what’s the best course of action for you, you can reach out to a financial counsellor. They can help you make informed financial decisions that are the most suitable for your current circumstances.

Consolidate your debt

If you have multiple loans or debts from different sources, you may be able to consolidate them into one loan. This could save you money as you only pay interest on one loan and will make it easier to manage your repayments. Instead of remembering multiple dates, you only need to keep track of one. 

The benefits of debt consolidation are numerous, such as simplifying your repayments, reducing your cost to maintain your debts, and having more control over when you can become debt-free.

However, before consolidating your debt, there are a number of things you should consider and check first. Whilst there are numerous benefits to consolidating your debts, sometimes, it may cost you more if you end up with a higher interest rate or have to pay fees.

You should compare the interest rate of the new loan, and find out whether there are any fees or additional costs, against your current loans. If the new consolidated loan ends up being more expensive than your current loans, then it might not be worth it and better to keep things as they are!

Some fees you should keep an eye out for include: penalties for paying off your original loans early, application fees, legal fees, valuation fees, and stamp duty. 

Another thing to watch out for is switching to a loan with a longer term. Although the interest rate might be lower than what you’re currently paying, if you have a longer repayment period, then you might end up paying more in interest and fees in the long run!

New Year, New Me: make 2021 your year

A new year can give you the perfect opportunity to reset and start anew. Make 2021 the year that you look after your credit score, and take control of your financial future. It’s never too late to start, and your friends here at Tippla are here to help you!

While we at Tippla will always do our best to provide you with the information you need to financially thrive, 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 decisions.