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How To Check My Credit Report For Free

How To Check My Credit Report For Free

Your credit report is an important document that gives you a clear overview of your credit history and current standing. It’s no wonder a lot of people ask us “how to check my credit report for free”. Tippla has the breakdown for you below.

How To Check My Credit Report For Free

What is a credit report?

Your credit report is a document that outlines your credit history. It is a summary of how you have handled your credit accounts and managed your debt. If you have a personal loan, home loan, credit card, or your name is on a utility bill, then you will have a credit report.

In Australia, you have a credit report with three credit bureaus – Equifax, Experian, and illion. Each month, your creditors and lenders will report your credit information – such as your repayment activity and history, to one of these three bureaus. The information reported by these financial institutions is what makes up your credit report.

The information on your credit report is what’s used to determine your credit score – a number ranging from 0 -1,200. It provides an indication of how reliable of a borrower you are. If you have positive information on your credit report – such as a reliable repayment history, then you will likely have a good credit score. 

However, if your credit report is filled with negative entries, such as defaults, bankruptcy, etc, then you will likely have an average to below-average credit score.

What goes onto your credit report?

There are many things that go onto your credit report, as outlined by Equifax, your credit report contains the following types of information:

Personal information Your credit report will contain certain information about your identity, such as your name, address and date of birth. It won’t include information such as your marital status, salary, etc.
Credit account information Listed on your credit report will be your credit account information. This includes the type of accounts you have, such as a credit card or loan, the date it was open and your credit limit.
Repayment history Your repayment history for your credit accounts will be listed on your credit report.
Credit applications Your credit report will list all of the enquiries that have been made on your report. There are two types of enquiries – hard or soft. Hard enquiries are when a lender or creditor looks at your report when you apply for a loan or type of credit. 

Hard enquiries affect your credit score. A soft enquiry does not affect your credit score, and ranges from you checking your own report or if a company checks your report for a pre-approved offer. If you have applied for credit, then it will show on your report.
Bankruptcies and defaults Your credit report contains negative entries, if applicable. This can include bankruptcies and defaults. Bankruptcy will stay on your credit report for up to 5 years. If you have defaulted on any of your credit repayments in the past 5 years, then it will appear on your credit report.

How long do items stay on your credit report?

Let’s get stuck into how long items stay on your credit report. Here’s a breakdown:

  • Credit accounts – all of your current accounts, and any that you have closed in the past 2 years;
  • Credit applications – any application you have made for some time of credit will remain on your report for 5 years;
  • Repayment history – your repayment history over the past 2 years will appear on your credit report;
  • Defaults – if you have defaulted on any repayments in the last 5 years then it will appear on your report;
  • Court judgements and bankruptcies – 5 years;
  • Serious credit infringements – these can stay on your credit report for up to 5 years.

Why does my credit report matter?

There are many reasons why your credit report matters, but we’ll take you through a few. One of the main reasons why it’s important to check your credit report and keep it, and your credit score healthy, is because it affects your ability to borrow.

If you have a lot of negative entries on your credit report, such as numerous defaults, then you will be perceived as a riskier borrower. Because of this, you might find it much harder to be approved for credit. 

Not only that, but the credit or loans you are approved for will likely come with higher interest rates, more fees and smaller borrowing limits. If you don’t take care of your credit report and credit score, then it can limit your finances, and as a result, your life. 

If you move into a new house or apartment and you need to sign up for your utilities, such as electricity and water, if you have a bad credit report and a low credit rating, then you might also be rejected by providers because you’re deemed too high of a risk. You could also struggle to get a phone contract.

Your credit report can also be valuable in helping you detect identity theft. If you check your credit report and see that something that doesn’t add up, such as a credit account you don’t recognise, then this could either be a mistake or an indication that someone has stolen your identity and is using it to open credit accounts. That’s why it’s important to check your credit report frequently.

How to check my credit report for free?

Now that you understand what your credit report is and its importance, let’s answer the question “how to check my credit report for free”. There are a few ways you can do this, and it depends on how long you’re willing to wait.

Request your report from the credit bureaus

If you would like to view your credit report for free, you can request a free copy from each of the bureaus – Equifax, Experian, and illion. However, it is important to highlight that you will have to wait approximately 10 days if you want to get a free copy. 

Generally, the bureaus will only allow you to see your credit report free once a year. You may have to pay for a copy of your report from the bureaus if you request a copy more than once a year, and if you want to receive it faster than 10 days.

Sign up to a platform like Tippla

This is where platforms like Tippla come in handy! With Tippla you can view your credit reports and credit scores from the two largest credit bureaus in the world – Equifax and Experian. On Tippla you can access your free personal Equifax credit report and your free personal Experian credit report.

Signing up to Tippla is completely free and you can view your credit report and score as often as you want – it won’t hurt your score. Your report is updated every 90 days, so you can see how you’re tracking throughout the year.

Does checking my credit report hurt my credit score?

No, it doesn’t! You can check your own credit report as often as you like, it won’t hurt your credit score or reflect badly on your report. This is because when you look at your own report, it is registered as a soft enquiry. Soft enquiries don’t affect your credit score.

The damage is done when you apply for a loan or type of credit, like a credit card. This is because when a lender or creditor views your report to see if you are a reliable borrower, this registers as a hard enquiry. Hard enquiries initially harm your credit score and will remain on your report for up to 5 years.

For more information on what affects your credit score and report, head to Tippla’s financial blog to find everything you need to know and more.

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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.

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How To Improve Your Credit Score? A Quick Guide

fix credit score, improve credit score

We’ve said it time and again – your credit score is an important number. The higher your number, the better. A good credit score can open up many financial opportunities for you. So how can you improve your credit score? We’ve put together a quick guide to help you fix your credit score.

fix credit score, improve credit score

What is a perfect credit score? 

We often get asked this question here at Tippla: what is a perfect credit score? When it comes to your score, which is also referred to as a credit rating, there’s no such thing as perfect. However, there is good – which is what everyone should be aiming for or higher.

In Australia, there are three credit reporting agencies – Equifax, Experian and Illion. Therefore, Aussies don’t have just one but three credit scores. It’s highly likely that your credit score will differ across the agencies, as they have different scoring methods and scales.

Broadly speaking, your credit score is a number ranging from 0 – 1,200. Depending on your rating, it falls somewhere on a five-point scale: excellent, very good, good, average and below average.

What is a good credit score for Australia? Here’s how Equifax and Experian rank credit scores.

When it comes to credit ratings, what is a bad credit score? We think it’s important to emphasise here that your credit score isn’t a reflection of you as a person, but an indicator of how you have managed your debt in the past. If your credit score is below average or average, then there is room for improvement. That’s why we’re here – to help you improve your credit rating through understanding and healthy financial habits!

How to improve your credit score

Now you know what a good credit score is, how can you improve your credit score so that yours is good or higher? Firstly, you need to know what goes onto your credit report and what matters when it comes to your credit rating.

Your credit score is the overall number which indicates how creditworthy you are to credit providers and lenders. Your credit report, on the other hand, contains all the information that your credit score is based on.

You have a credit report for each credit score you have. In Australia you have three credit ratings, therefore, you also have three credit reports. Just as your credit ratings vary across the different bureaus, so do your credit reports. Also, you might find that you have different information on each of your reports.

Just because your information varies across your reports, doesn’t mean the information is wrong. However, 1 out of 5 credit reports contain at least one mistake that can cause your number to drop. That’s why it’s important to check your information thoroughly and frequently. 

So what exactly goes onto your credit report? Your credit report contains a mix of information about your previous financial behaviours. This includes: 

  • Credit Accounts; 
  • Repayment History; 
  • Defaults; 
  • Credit Applications;
  • Bankruptcies and Debt Agreements;
  • Credit Report Requests. 

With this in mind, how can you increase your credit score? We’ve put together a number of things you can do to fix your credit score. Tippla also recently covered a number of credit score FAQs which you might find useful.

Space out your credit applications

When you apply for a loan, a credit card, or even sign up with a new electricity supplier, this is referred to as a credit application. If you’re successful in receiving whatever type of credit you have applied for, then your application has been approved.

A lot of people don’t know this, but if you make multiple applications in a short period of time, this can actually harm your credit score. Why? Well, when you apply for credit, your creditor will assess your application and how big the risk is that you may miss a repayment or won’t be able to pay back your loan at all. Your credit report is one of the elements used to assess if you are a high or low-risk candidate.

When a credit provider does this, it is called a hard enquiry. 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.”

The tricky thing here is, it doesn’t matter what the reality of the situation is, multiple hard enquiries can look bad to potential lenders and credit providers. Whilst you might have made multiple applications for a loan because you were trying to find the best deal, to a lender, it could look like you were in a really bad financial situation and in desperate need of cash.

With this assumption at the forefront of their mind, they may be more likely to reject your application. To be safe, it’s better to know your options before you dive deep into the world of credit. 

Shop around before making an application

How can you do this? You could use comparison sites to try and find the best deals or reach out to different credit providers to learn more about their offers before making an application. By shopping around and comparing your options beforehand, this means you may only need to make one credit application, instead of multiple. Above all, this can protect your credit score from falling too much.

If you’re reading this and feeling worried because in the past you have made multiple credit applications at once – never fear. Time can heal all credit wounds. Now that you have this piece of information, you can use it to improve your credit score going forward. 

Make your repayments on time

Your credit score is a number which indicates to lenders how reliable of a borrower you are. If you have a good credit score, then that tells them that you aren’t a risky client and in the past, you’ve handled your debt well.

Paying your bills and making your credit repayments on time, therefore, could go a long way when it concerns your credit score. In fact, your repayments make up 30% of your Equifax credit score. 

That means, if you lose track of your repayments and miss, or even default on one of your bills, this could be bad news for your score. Defaults can stay on your credit report for five years, which means any time you apply for credit during this period, the provider will be able to see that you defaulted in the past and that might lead to them rejecting your application.

So how can you pay your bills on time? There are a number of things you could do to ensure you don’t miss a repayment. For example,  set up a budget to make sure you have enough money to cover all of your necessary expenses. You could also set up automatic payments or direct debits.

Check your credit report frequently

Another way you could improve your credit score is by frequently checking your credit reports for mistakes, as we mentioned above, or for credit card fraud. Your credit report outlines all of the credit accounts you currently have or have had in the past two years. If you see one on your report that doesn’t belong, then you might have been subject to credit card fraud.

Discovering this early could make a lot of difference, and it’s just one of the many ways you can use your credit report for good!

Not only is it a good idea to check your report frequently in case there are any mistakes on it, it could also be useful to be familiar with your report. The more you understand your credit report and what goes into it, the more likely you’ll notice changes on your report, and whether they are good or bad.

Over time, this could give you a deeper understanding of your credit report, helping you learn which of your behaviours adversely affect your score. You can use this knowledge to avoid this behaviour and boost your credit score.

Keep your credit accounts open

You might be surprised to learn that 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.

If you can show that you have been able to effectively manage your current or previous credit accounts, then lenders and credit providers might be more inclined to provide you with finance.

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. 

How to improve your credit score: time and consistency

Tippla hint: Stay consistent! Consistency is key when it comes to your credit score. Unfortunately, there’s no quick fix to improve your credit score and it can’t be changed overnight. With that being said, it can be done. Sticking to the above suggestions could make all the difference – make your repayments on time, check your credit report often, space out your credit applications and more. 

How long does it take to improve your credit score?

You can improve your credit score with time. 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.

What are the consequences of bad credit?

If you’ve taken a look at your credit score and it’s not quite what you’re hoping for, never fear! It is possible to improve your credit score. But if you’re wondering if it’s even worth the effort, here are some of the consequences of bad credit.

  • Credit applications might be rejected;
  • Potentially higher interest rates;
  • Insurance premiums could be more costly;
  • It might make starting a business more difficult;
  • Might cause obstacles to getting a phone contract.

Want to learn more?

If you’re hungry for more information and ready to embrace your inner finance geek, then head back to school! Learn what they didn’t teach you at school with Tippla’s Credit School – a free online short course which will guide you through the ins and outs of your credit score.

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How Does Bankruptcy Affect Your Credit Score?

bankruptcy credit score

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.

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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!