Category: Loans

Have you recently been through the bankruptcy process and you’re wondering if you can now get a loan? Tippla has put together this helpful article so you can understand your options.

There are many reasons why someone might have to enter into bankruptcy. If you are about to enter into bankruptcy, or you’ve just come out of the bankruptcy process, can you still get a personal loan after bankruptcy? We’ve gathered all the information to help you understand your options.

Bankruptcy in Australia

Bankruptcy is the legal process that is declared when someone is unable to repay their debts. If you are struggling to repay your debts, there are three formal options available for you – bankruptcy, personal insolvency agreements and debt agreements. Today, we’re going to focus on bankruptcy.

Bankruptcy typically lasts for 3 years and 1 day, however, you can end your bankruptcy earlier if you’re able to repay your debts within this time. Bankruptcy can remain on your credit report for up to 5 years.

According to the Australian Financial Security Authority (AFSA), there were 6,792 bankruptcies in Australia in the 2020-2021 financial year. This was 46.7% less than the previous financial year.

Going through bankruptcy

If you need to enter into bankruptcy, there are two ways you can do so. According to the AFSA: “You can enter into voluntary bankruptcy. To do this you need to complete and submit a Bankruptcy Form. It’s also possible that someone you owe money to (a creditor) can make you bankrupt through a court process. We refer to this as a sequestration order.”

When you enter into bankruptcy, the Australian government will appoint you with a trustee, who is a person or body who manages your bankruptcy. When you enter into bankruptcy, you are obligated to do the following:

• Provide details of your debts, income and assets to your trustee;
• Your trustee will notify your creditors that you have entered into bankruptcy. This will prevent most creditors you owe money to from contacting you regarding your debt;
• Your trustee may sell some of your assets to repay your debts;
• If your income exceeds a certain amount, then you may need to make compulsory payments.

Before entering bankruptcy

If you are currently struggling with your debts, there are a few things you can do before formally entering into bankruptcy. 

Seek financial advice

In Australia, there are free resources you can use to help you get on top of your debt, but it’s important that you act quickly. You can reach out to the National Debt Hotline, a not-for-profit service that helps Australians tackle their debt problems. You can also speak to a free financial counsellor through their service.

By using the National Debt Hotline, you can speak to a professional who can help you get on top of your debt before it escalates to bankruptcy, or they can help you understand your options if you need to enter into some kind of debt agreement.

Reach out to your creditor

As soon as you begin to struggle with making your loan repayments, it’s important that you reach out to your creditor/s. You can let them know that you are experiencing financial difficulty. Many credit providers have hardship programs in place that have been created to help support their customers during times like these.

Specifically, you might be able to agree with your creditor on extending your repayment period, set up a flexible payment arrangement and more. However, some of these options could be legally enforceable. Therefore, you may want to seek independent advice before committing to anything.

Accessing finance during bankruptcy

If you have entered into bankruptcy – what are your options when it comes to finance? We have broken this down into two parts – accessing finance when you’re going through the bankruptcy process, and whether you can get a personal loan after bankruptcy.

Can you get a personal loan during bankruptcy?

Let’s start first with whether you can get a personal loan during bankruptcy. Technically, the answer is yes, but there are a few things you need to be aware of. In Australia, according to the Bankruptcy Act of 1996, Section 269 you will have to disclose your bankruptcy status as a debtor if you want to borrow more than $3,000. If you don’t disclose your bankruptcy, then you could face imprisonment.

If you apply for a loan when you’re in the bankruptcy process – this is a big risk for a lender. This is because bankruptcy suggests that you are not effectively able to manage your debt and you are, therefore, a high-risk borrower.

Whilst you can still apply for a loan when you’re bankrupt, it is completely up to the lender as to whether they will loan you money. In order for them to accept your application, you will typically need to prove that your situation has changed since entering the bankruptcy process. 

This could include securing employment when you were previously unemployed, adjusting your lifestyle to one that you can comfortably afford, and other positive financial decisions. If you can clearly demonstrate you have adjusted your financial behaviour, then you might be able to find a lender who will loan you money. 

It is worth highlighting here that if you are currently bankrupt – you are deemed as a high-risk borrower. In order to offset the high risk that you pose, lenders will typically only offer you loan options with very high interest rates, or loans that are secured to an asset. If you are unable to repay this loan, then you could put yourself under further financial strain.

Alternatives to taking on a personal loan

If you are currently in the bankruptcy process and in need of extra financial assistance, it might be a good idea to explore other alternatives as opposed to taking on more debt. This can include:

• Seeing if there is any government assistance available for you;
• Adjusting your lifestyle and cutting out any unnecessary expenses;
• Setting up a budget to get on top of your finances.

Can you get a personal loan after bankruptcy?

Now let’s tackle whether you can get a personal loan after bankruptcy. Once you have completed the bankruptcy process, there are no restrictions on applying for loans or credit. However, it is once again up to the credit provider to decide whether they will lend you money.

As we mentioned above, most credit providers will want to see evidence that you have improved your financial habits. This could include a solid banking history (not overdrawing your account, no direct debit reversals, etc.), no new defaults on your credit report and similar positive financial behaviour.

Your credit report will show your bankruptcy for either:

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

Therefore, just because your bankruptcy has ended and you no longer have to inform lenders if you want a loan over $3,000, when they check your credit report, for two years after your bankruptcy has ended, they will be able to see that you were bankrupt.

Before you apply for any type of credit, it’s a good idea to check that you actually need it. Can you make some adjustments to your budget (or create a budget if you don’t have one), can you cut out any unnecessary expenses, or can you get government assistance to help you? These are some options you could consider.

You’ve decided you want to get into the property market, but what are the first steps in buying your first home? Tippla has put together an easy guide to get you started.

Buying your first home is an exciting process. Buying a house is likely one of the biggest purchases you’ll ever make, and it can set up your future self for financial stability. As exciting as the process can be, there is also a lot to consider. 

Before you even find the property you want to purchase, there are a few things you should do first. Tippla has put together the first steps you should take in buying your first home. But first, let’s take a look at the general situation of the Australian property market.

Australia’s property market for first home buyers

Despite the COVID-19 pandemic, so far this year, the housing market has remained largely resilient. According to the Australian Bureau of Statistics (ABS), $22.86 billion worth of new home loans were taken out during the month of June 2021 for owner-occupied homes. Whilst this was down by 2.5% from the previous month, it was higher by 75.9% from June 2020

For the same period, the number of new loan commitments for first home buyers was down 7.8% from the previous month but remained at an elevated level similar to that seen in November of 2020.

Specifically, during the month of June, 14,418 new home loans were taken out by first home buyers. The largest number of home loans was taken out in Victoria, followed by New South Wales and Queensland.

Now, let’s get into the first steps you should take when buying your first home.

Step 1: Do Your Research

When looking at buying your first property, it’s important to do your research and understand your motivation. Do you want a house to call home, do you want to use it as an investment property, or do you only plan to live in it short-term and then lease it out? For each of these situations, you’d likely be looking for a different kind of place.

Once you know why you’re buying your first home, then it’s a good idea to do your research and see what’s out there. Housing prices change all the time. Get an idea of what you want, what area you would like to buy in, and how much what you want will cost in that area.

Here are some of the top property websites where you can search for what’s on the market:

• realestate.com.au
• Domain
• Real Estate View
• Onthehouse.com.au
• AllHomes

If you want to find out the average property prices per state in Australia, then you can check out the Australian Bureau of Statistics (ABS) latest figures. These are updated on a quarterly basis.

It’s a good idea to do your research on what’s available and get an idea of how much you are looking to spend if you want to buy in a specific area. You might find that what you want might be too expensive in the area you want to buy, so you might have to look in other areas. 

Determine how much you can borrow

Unless you have enough money to buy a property outright, you will likely need to take on a mortgage from a financial institution to buy your first home. Before you take this step, it’s a good idea to know how much you will likely be able to borrow.

The amount you can borrow will depend on your income, expenses and however much money you have saved. Banks, lenders and financial education platforms such as Moneysmart have a borrowing calculator, which can give you an idea of how much you could borrow, and what your repayments might look like.

Knowing how much you will likely be able to borrow can help you refine your search, and it means you won’t waste time looking at properties that you probably won’t be able to afford.

Borrowing capacity explained

In Australia, the amount you can borrow for a home loan will depend on the individual lender and their appetite for risk. To calculate your borrowing capacity, lenders will typically use the household expenditure measure (HEM). 

When you apply for a home loan, they will take a look at a range of factors to determine your current lifestyle and financial stability. Some of the factors they’ll look at include your age, income, employment, number of people making the application (eg. single individual vs a couple), number of dependants, spending habits, debts and more. 

It is generally recommended that you borrow 80% of the value of the house you intend on purchasing. That means, you will need a 20% deposit for the house, and then take on a mortgage for the remaining 80%. This way, you can avoid paying Lenders Mortgage Insurance (LMI). If you are willing to pay LMI, then you can have a deposit of as little as 5%.

Understand the total cost of buying a house

When it comes to buying a house, there isn’t just one cost you need to consider. You will also need to factor in stamp duty, conveyancing and legal fees, house and pest inspection costs, as well as other costs associated with your home loan including mortgage registration fee, loan application fee and more.

According to realestate.com.au, if you want to buy a home in Queensland that’s valued at $500,000, you will likely end up paying between $10,000 – $20,000 extra in fees. Here’s a breakdown based on their data from 2020:

• Property value: $500,000
• Conveyancing and legal fees: $1800
• Stamp duty: $0 for first-home buyers, $8750 for others
• Building and pest inspection (combined): $600
• Mortgage registration fee: $187
• Transfer fee ($35 for every $10,000 over $180,000): $1120
• Loan application fee: $500 – $600
• Mortgage insurance: $8000
• Council and utility rates: roughly $500 (per quarter)

Therefore, considering all of these extra fees, you could be paying between $512,707 – $521,557 altogether. That’s why knowing all of the costs associated with buying your first home can help you avoid any nasty surprises and budget effectively.

Look into government grants

If you are buying your first home, then you could be eligible for government grants. The main one is the First Home Owner Grant or the First Home Loan Deposit Scheme. For your first home, there is also a First Home Concession, where you can avoid paying the stamp duty for houses under $550,000.

Lenders Mortgage Insurance

Another thing you should look into is LMI. LMI is a premium that is added to your home loan if your deposit is below a certain level. Typically, if your deposit is less than 20% of the total cost of the property, then you will pay LMI.

The amount of LMI you will need to pay depends on how much of the deposit you have. If you only have a 5% deposit, then you will likely be paying a lot in LMI. But, if your deposit is 15%, then you likely won’t be paying a lot for LMI. Nonetheless, LMI is an extra cost and one you can avoid if you have a deposit of generally 20% or more.

LMI is calculated on a sliding scale, so the closer you get to a 20% deposit, the less LMI you will need to pay. For example, if you’re a first home buyer and you purchase a house for $500,000 and secure a mortgage with a 10% deposit, according to Westpac’s stamp duty LMI calculator, then you’ll be looking at paying about $13,830 in LMI. If you put down a deposit of 15%, then the LMI you will need to pay will be around $6,014. 

Step 2: Start saving

Once you’ve done your research – you know what type of property you’re after, how much you can afford to borrow, and you’re aware of all the hidden costs, the next step is to start saving! It’s generally a good idea to have already saved some money before you start looking into getting a property because a deposit can be quite hefty. Although the amount will depend on what you want to buy.

So how can you save money? One of the most effective ways to consistently save money is to establish a budget.

Here are a few different types of budgets you could explore.

Step 3: Discover your home loan options

What comes next? You’re already saving and you’ve got a general idea of all of the costs involved – what’s the next step? One thing you could do is learn more about your home loan options.

Consider a mortgage broker

A mortgage broker is a person who acts as a go-between between yourself and banks and lenders to help you arrange a home loan. Mortgage brokers are required by law to act in your best interest when suggesting a loan for you.

Pros and cons of a mortgage broker

A good mortgage broker can be an invaluable resource. Not only can they help you understand all of the hidden costs when it comes to home loans, but they can also help guide you through the process of securing a mortgage.

A good mortgage broker should understand your needs and goals and help you work out what you can afford to borrow and find the financing options that suit your circumstances. They should also explain the characteristics of each loan, such as the interest rate, features and fees.

A mortgage broker will help you apply for the loan and then manage the process through to the settlement.

Mortgage brokers generally are paid via a fee or commission from lenders for selling their products. That means you as the consumer don’t have to pay a mortgage broker – but some mortgage brokers will charge a fee. Be sure to clarify whether your mortgage broker charges a fee before using their services.

Because mortgage brokers typically receive commissions from lenders and banks for recommending their products, this creates an obvious potential conflict of interest. That’s why it’s a good idea to also do your own research.

Compare home loans

Regardless of whether you decide to enlist the help of a mortgage broker, it’s a good idea to do your own research on home loans. When you take out a home loan, there can be many variables – the interest rate, loan features, and fees can vary among lenders.

Two important indicators you should look out for are the interest rate and comparison rate. The interest rate highlights how much interest you will be charged each year. You will need to repay the interest in addition to the amount you have borrowed.

The comparison rate, however, is a percentage that gives you a better picture of how much you will have to repay on top of the amount you borrowed. Specifically, the comparison rate includes the interest rate plus most of the fees and charges that come with the loan.

Moneysmart outlines that the following priorities when looking for a home loan:

• Get the shortest loan term you can afford;
• Aim for the lowest interest rate;
• Warning – features costs extra.

Get pre-approval for buying your first home

Another part of the journey to buying your first home can include securing pre-approval from a lender. Loan pre-approval means that a lender has agreed in principle to lend you a certain amount of money to go towards buying your home. However, a pre-approval means it hasn’t yet progressed to full or final approval.

The benefits of pre-approval mean that you have a stronger idea of how much you can borrow, and therefore, what kind of property you can afford to buy. It can also allow you to negotiate with more certainty, and if you go to an auction, bid with more certainty.

In order to secure pre-approval, they will ask for evidence of your current financial situation. This could include your bank statements, credit score, income and employment information. Pre-approval lasts for 3-6 months, but it doesn’t mean you are committed to the loan, but it does show that you’re serious about buying.

Step 4: Start house hunting

Now, you are ready to start looking for your dream home, investment property, or your starter home – whatever it may be! This is probably the most exciting part of the journey – attending house inspections, seeing what’s out there, attending auctions.

Once you’ve got yourself set up and ready to go, now you can get serious and start the process of house hunting!

Are you looking for a personal loan but you’re not sure which one is right for you? Tippla has put together this helpful guide on the different types of personal loans.

What is a personal loan?

A personal loan is an amount of money that you can borrow from a financial institution such as a bank, non-bank lender, credit union, etc. You can use this money to pay for a range of personal expenses, such as:

• Medical expenses;
• Weddings;
• Vacations;
• Funerals;
• Large purchases, such as a television;
• Emergency expenses;
• Home renovations.

Typically, with a personal loan, you will borrow a set amount of money, and you will need to repay this amount in full, plus interest, over a set period of time. Some lenders may also charge fees for personal loans, which you will have to pay.

Why would you take on a personal loan?

Because you can use a personal loan to cover many different expenses, there are a number of reasons why you might take on a personal loan. This could be to cover an unexpected expense, make a large purchase, or help pay for an event – such as a wedding, funeral or vacation.

Basically, if you have a large expense, then you might want a personal loan to help pay for it. 

Where can you apply for a personal loan?

Now you know the what and the why, let’s look at where you can apply for a personal loan in Australia.

Of course, banks are still one of the largest players in the game. But, you can also get personal loans from many non-bank lenders across the country. You can also apply with credit unions.

If you are looking for a personal loan, then Tippla has you covered! When you sign up for Tippla, you can access a range of personal loan offers that have been tailored to your credit score. When you fill out the application, you will be matched with a range of lenders who would be willing to lend to you based on your credit score.

Furthermore, there are many comparison websites that display a range of loans available if you want to look around for a loan. However, these sites might not show all of the options available on the market.

Am I eligible for a personal loan?

Whilst different banks, non-bank lenders and credit unions will have different lending requirements, there are some general criteria you will likely need to meet to be eligible for a personal loan.

The general criteria to be eligible for a personal loan is:

• You are over 18 years of age;
• Be an Australian or New Zealand citizen, Australian permanent resident, or have an eligible visa;
• Live in Australia;
• Be employed and receive a regular income;
• Not be going through the process of bankruptcy.

Each financial institution will likely have different minimum income and credit score requirements, as well as other criteria. Most lenders will require you to provide 90 days worth of bank statements so that they can assess your current financial standing and spending habits. That’s why it’s a good idea to do your own research before applying for a loan and make sure you’re confident you meet the requirements of the lender you’re applying with.

Different types of personal loans 

Let’s dive into the different types of personal loans. You might be surprised to learn that not all personal loans are the same. In fact, there are several variations of personal loans. Tippla has compiled a list of the different types of personal loans.

Secured personal loans

One of the most common types of personal loans is secured personal loans. A secured personal loan is when you have a personal loan that has been secured with collateral. This is typically a vehicle (car loan), or with a house (a mortgage). But, with more types of loans coming to the market, other assets can be used to secure a personal loan.

With these types of loans, the asset acts as security, which is where the name “secured” personal loans comes from. Therefore, if you default on your loan, then your asset could be repossessed as a way to cover your repayments.

Typically, secured personal loans are easier to obtain from a reputable lender, because of the extra security. They typically come with lower interest rates and fees as there is less risk for the lender.

Unsecured loans 

Unsecured personal loans do not have an asset attached to the loan. Because the lender is taking on more of a risk, you’ll likely be charged higher interest rates and fees than a secured loan. 

An unsecured personal loan can be good if you don’t have an asset to use as collateral. However, you might have to convince the company you’re applying with that you’re a reliable borrower through proof of income, your credit score and other factors.

Fixed-rate personal loans

When it comes to personal loans, most of them come with a fixed interest rate which you will need to pay to the lender, on top of the amount you borrowed. What does this mean? The interest rate won’t change for the duration of your loan. This is called a fixed rate personal loan.

Having a fixed interest rate means you can easily budget your repayments, as they shouldn’t change each month. Because your interest rate won’t change, you can also protect yourself from having to pay more, should rates increase during your loan period.

Variable-rate personal loans

A variable-rate personal loan, on the other hand, is where the interest rate can change during the term of your loan. This could see your interest rate fall or increase, depending on the market.

Whilst a variable-rate interest loan can offer you more flexibility and allows you to capitalise on lower interest rates, it does also open you up to more of a risk of having to pay higher interest rates. Paying interest on your personal loan can cost you a lot in the long term.

Overdraft loans

A personal overdraft is kind of like a line of credit, which has been linked to your transaction account. If you run out of funds in your bank account, then the overdraft will activate, allowing you to have access to additional funds.

Similar to a personal loan, you will need to repay the money you spend when accessing your overdraft, plus interest. However, you will typically only be charged interest on the amount that you spend. Say your overdraft is $1,000 and you spend $100, then you’ll pay interest on the $100 you’ve spent – not the full $1,000.

Student loans

In Australia, if you are a citizen and want to study within the country, then you are most likely able to apply for Higher Education Loan Program (HELP), a government student loan.

As part of HELP (also referred to as HECS), the Australian government provides loans to students who are studying approved higher education courses. This means, they don’t have to pay for the course upfront. Instead, once their taxable income reaches a certain level, their repayments will commence.

If you are not eligible for this type of loan, or if you need further assistance for costs related to your study, then there are other options available. Some lenders will offer student-focused personal loans, where the money borrowed must be used for costs associated with your education.

Debt consolidation loans

If you have multiple debts, and you want to pay them off, you can take out a debt consolidation loan. The idea is, you take out one loan, and you use it to pay off your existing debts. Then you only need to focus on repaying one debt.

Some of the benefits of a debt consolidation loan include potentially getting a lower interest rate, and the convenience of only having to manage one debt, instead of several. However, a debt consolidation loan isn’t a one-size-fits-all solution. Taking on a debt consolidation loan could put you into a more difficult financial situation. 

If you’re unsure what’s the best option for you, it’s a good idea to reach out to a financial counsellor. You can speak to a counsellor for free, independent and confidential financial advice.

Summing it up

As it can be clearly seen, there are many different types of personal loans. This includes secured and unsecured personal loans, fixed-rate and variable-rate personal loans, overdraft, debt consolidation and student personal loans.

Are you looking for some extra finance for emergencies, for a big purchase, or are you wanting protection from online fraud? Then a credit card might be just what you’re after! But how can you get a credit card? Tippla has put together a quick and easy guide on how to apply for a credit card in Australia.

What is a credit card?

A credit card is a payment card that is provided by banks and similar financial institutions to allow the cardholder to pay a merchant for goods and services using a line of credit. 

So what does this mean? Basically, the money spent on a credit card isn’t the money that you have earned from your job. Instead, it’s a revolving line of credit that you need to repay each month, or at the very least, make the minimum repayments if you want to avoid late fees.

Am I eligible for a credit card?

Who can receive a credit card? This will vary from card to card, and it depends exactly what you’re after. But there are a few general requirements that are applicable for most cards. 

These requirements are:

• You must be over the age of 18;
• An Australian citizen or permanent resident and hold a valid visa;
• Not be going through bankruptcy;
• Have a decent credit score;
• Have a stable job and steady income that will allow you to repay the maximum credit card limit.

When it comes to meeting the requirements of a credit card, the main thing the credit provider is concerned with is whether you have the ability to repay your credit card balance every month.

Can you get a credit card with no credit score?

One of the general requirements for a credit card is to have a good credit score. This shows you are responsible with your finances and can make your repayments on time. But what if you don’t have a credit card? Or what if you have a bad credit score? Can you still get a credit card?

The short answer is yes, but your options will be more limited than if you had a good credit score. The main thing banks and other credit card providers are concerned about is whether you can repay your balance. You can do this by showing them you are responsible with your money.

This could mean, highlighting that you have a steady income, a stable job and that you can save consistently. Furthermore, One thing you could do before applying for a credit card is to build your credit history or improve your credit score so that you have a lot more options at your fingertips.

Your options

If that isn’t an option, there are still things you can do. If you’re studying at university, TAFE, VET or working in an apprenticeship, then you may be eligible for a student credit card. You can apply for these types of credit cards without needing a credit score. However, you need to be a student to apply for this kind of credit card, and it might not offer the best terms and conditions compared to other types of credit cards. 

Alternatively, there are such things as secured credit cards. Similar to a secured personal loan, a secured credit card is where your credit card is “secured” AKA, guaranteed to be paid. This is achieved by having a cash deposit in your bank account that’s the same as your credit limit.

You can also call your current bank and explain your situation. If you have been a customer with them for a while, they might be able to offer you a credit card based on your personal circumstances.

Can you get a credit card on Centrelink?

If you currently receive financial assistance from the government, are you eligible for a credit card? Yes, being on Centrelink doesn’t mean you can’t get a credit card. However, your options might be more limited.

Before applying for a credit card, it’s important to make sure you understand and meet the eligibility requirements. You can compare your options on numerous comparison websites, however, they might not cover the entire market. You can also contact your bank to see if they have any options that meet your needs.

Generally speaking, if you can meet the common requirements – age, Australian citizen or resident, minimum income and good credit history, then there should be a credit card out there for you, regardless of whether you receive help from Centrelink.

Where can you apply for a credit card?

When you’ve determined your eligibility, the next question is where can you get a credit card? Nowadays, you can get credit cards from many different companies – and not all of them are financial institutions. It’s no longer just banks that have a monopoly.

Here is an overview of who offer credit cards in Australia:

• Australian and international banks;
• Financial institutions, 
• Airlines, such as Qantas and Virgin;
• Supermarket chains, such as Woolworths and Coles;
• eCommerce companies like Kogan;
• Department stores, including David Jones.

How to apply for a credit card in Australia

Here are the simple steps you can take to apply.

1. Do your research

Before you apply for a credit card, one of the best things you can do is research all of your options. Check if you are eligible for a credit card, and discover which credit card is best for you. Could you benefit from a rewards card, or would a card without an annual fee be more worth your while?

Here are some questions you can ask yourself when trying to determine whether a credit card is right for you, and if so, what type of card would best suit your needs:

• What will I be using the credit card for – day to day spending, to pay for bills, or to make big purchases every so often;
• Will I be able to pay off my credit card in full each month?
• Am I, at times, forgetful and not the best at sticking to a budget and therefore, likely to carry over a balance each month?
• Do I travel a lot?
• Do I exclusively do my grocery shopping at one brand – like Coles or Woolworths?
• Do I need a credit card, and can I afford it? Do I already have a lot of debt?
• Will a credit card help or harm my credit score?

2. Contact the company you want to apply with

Every time you make an application for credit the company that you apply with will check your credit score and report unless you go with a no-credit-check lender. When a lender checks your credit report, it registers as a hard enquiry on your report, and it harms your credit score. 

The hard enquiry will be registered on your credit file regardless of whether you’re approved for the credit or not. Because of this, another thing you can do is when you’ve made a decision on which card you want and where you want to apply, you can contact the company directly.

Why would you do this? Because you can clarify with them whether you meet the eligibility criteria. They probably won’t be able to tell you whether you’ll be approved or rejected without you making the application, but they might be able to give you a better idea. Therefore, when you make the application, you can be more secure in the fact that you will be approved, and keep the impact on your credit score to a minimum.

3. Submit your application

Once you have done your research, and you’re sure you meet all of the eligibility requirements, you can then submit your application. Most companies will allow you to apply online. These forms generally don’t take very long.

Alternatively, if you’re applying for a credit card with a bank, you can go to your local branch and submit your application in person.

Summing it up

 We’ve thrown a lot of information at you, so let’s sum it up. Here’s how to apply for a credit card in three easy steps:

1. Do your research – identify why you need a credit card and which type of card would be best for you. Once you have determined this, you can then find which company can offer you the best deal;
2. Make sure you meet the eligibility criteria – when you’ve found which card you want, take a look at the eligibility criteria to make sure you meet the company’s standards. If you’re not sure, you can contact them to try and get a better idea;
3. Make your application – the easiest way is to apply online, however, if you’re applying with a bank, then you can go into your local branch if you’d prefer to do it in person.

Are you looking for a personal loan, but you’re worried about not having a credit score? Can you even get a personal loan with no credit score? Tippla has put together this helpful guide to answer your questions.

Why does a credit score matter when applying for a personal loan?

Your credit score is a number ranging from 0 – 1,200. This number represents your creditworthiness, AKA, how reliable of a borrower you are. The higher your score, the more reliable you are perceived to be. If you have a low score, then you are deemed as a higher risk.

Your credit score is viewed by credit providers, such as lenders, banks, utility companies and more, every time you apply for some kind of credit. This could be a loan, credit card, phone plan and more.

When you apply for a personal loan, your credit score is one of the many ingredients lenders and credit providers use to determine how risky of a borrower you are. Because of this, your credit score can affect your loan application.

Whilst your credit score isn’t the only factor lenders consider, it can strengthen, or if you have a below-average or no credit score, weaken your loan application. That’s why it’s a good idea to know what your credit score is, and how to improve it.

What does having no credit history mean?

If you don’t have a credit score at all, it means one of the measures lenders use to assess your application is missing. This means they have less information to make an informed decision.

If you don’t have a credit score, this could be a red flag for a lender. Because of this, you might only be offered loans with higher interest rates or your application could be rejected entirely. Therefore, having a good credit score or higher can improve your chances of being approved for a personal loan.

What do lenders look at when applying for a personal loan?

Your credit score is only one of the factors that lenders and banks use to assess your loan application. Some of the other things they also look at include your salary, spending habits, length of employment, government benefits and more.

Here are some of the minimum requirements for applying for a personal loan:

• Be 18 years or older;
• Be an Australian or New Zealand citizen, or have Australian residency or valid visa;
• Live in Australia;
• Meet the minimum income requirements;
• Not be going through bankruptcy;
• Have employment or receive a regular income;
• Have a good credit rating.

What are my options to get a personal loan with no credit score?

If you don’t have a credit score, it doesn’t mean that you can’t get a personal loan. However, it will reduce your options. Furthermore, some loan types and amounts could be completely out of your reach if you don’t have a credit score.

This means you might not be able to get the type of loan or borrow the total amount that you want because you don’t have a credit score. Nonetheless, there are still avenues you can explore to get a personal loan.

Here are some of the options available for you to get a personal loan with no credit score.

No credit check personal loans 

In Australia, you can get a personal loan without the lender performing a credit check. This could be an option if you don’t have a credit history However, no credit check personal loans are very difficult to find, and the options are limited. 

For no credit check personal loans instead of looking at your credit history, lenders will instead look at your income, employment status, existing debts and other criteria when looking at your loan application. 

Because these loans are riskier for the lender, no credit check personal loans will often come with higher interest rates and fees. 

Secured personal loans

When it comes to personal loans, there are two main types – unsecured and secured personal loans. A secured personal loan is a loan guaranteed by an asset, such as a car, motorbike, or something similar. The asset acts as security, which is where the name “secured” personal loans comes from. If you default on your loan, then your asset could be repossessed as a way to cover your repayments.

Because of the extra security, secured personal loans are generally easier to obtain from a reputable lender. They typically come with lower interest rates and fees as there is less risk for the lender.

If you don’t have a credit score, taking on a secured personal loan could be an option for you. However, just because secured personal loans on average can have lower interest rates, if you have no credit history at all, you still might be charged higher interest rates than someone with a good credit score, regardless of whether the loan is secured or not.

How to build a credit history from scratch

Whilst you can get a personal loan without a credit score, it’s not necessarily your best option. So how can you build a credit history from scratch? Here are a few things you can do.

Open a bank account

If you’re trying to build your credit history, a good starting point is to open a bank account for yourself. Having a bank account can help you apply for credit later down the track. It is also a good way of tracking your spending, which is something that lenders like to see when you apply for a loan.

Although opening a bank account won’t directly impact your credit score, it could be a good starting point.

Add your name to your utilities

If you live out of home and have utilities, such as water, gas or electricity, then it could be a good time to add your name to your utility bills. Your utilities are a form of credit. If your name is on the account, then each payment you make could go towards building your credit score.

Apply for a credit card

Another way you can build your credit history is by applying for a credit card. Whilst your choices are more limited if you don’t have a credit score, there are still options out there.

For example, you could get a student credit card or a secured credit card. Alternatively, if you have had a bank account with a bank for a while, they might be willing to provide you with a credit card. 

Proactively provide information to credit bureaus

Credit bureaus base your credit reports and scores on the information provided to them by the companies you have credit with. If you don’t have any credit, then the bureaus likely won’t have any of your information.

One way you can change this is by providing your information directly to the credit bureaus. You could, for example, send them a document to prove your identity and address. If you move house, it’s important that you update your address, so you don’t end up with multiple files with different credit information.

How long will it take to build a credit history?

Unfortunately, you can’t build a good credit history overnight. As the saying goes, good things take time. If you don’t have any credit history, the good thing is that you don’t have to wait for negative entries to be removed from your credit report. However, it will still take time for your good credit behaviour to reflect on your credit score.

According to Experian, one of Australia’s largest credit bureaus, it takes between 3 and 6 months until they have collected enough data to calculate a score for you.

What’s the best credit score for a personal loan?

Whilst there is no “perfect” credit score, if you are wanting to apply for a personal loan, you should be aiming for a credit score that is either good or higher. The better your credit score, the more options you will have.

Bad credit score? Here’s how to improve your credit score

What if you have a below-average credit score? Similar to having no credit score at all, this can limit your finance options, and you will likely be offered loans with higher interest rates, fees and less desirable lending conditions.

Here are 3 easy ways you can improve your credit score.

Space out your credit applications

When you apply for a loan, the company you apply with will check your credit report. This is known as a hard enquiry and will lower your credit score. Because of this, it is a good idea to limit your credit applications to protect your credit score. 

You can do your research, compare your options, and apply for loans where you meet all the criteria. This could limit the number of applications you need to make and protect your credit score.

Make your repayments on time

Your repayment history contributes to your credit score. If you miss your credit repayments or default on one of your bills, then this could appear on your credit report and drag down your credit score. With this in mind, it’s important to ensure you always make your repayments on time. 

How can you do this? You could set up automatic payments, budget so you have enough money in your account to afford the repayments, and don’t take on more debt than you can afford to repay.

Check your credit reports frequently

Frequently checking our credit reports can allow you to identify a mistake on your credit report quickly. 1 in 5 credit reports has some kind of mistake on it. Sometimes this mistake can be harming your credit score.

If you are frequently checking your credit report, you will be able to identify mistakes early on and have them removed. This can protect your credit score from being dragged down by inaccurate information.