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What Affects My Credit Score? A Quick Guide

what affects my credit score

Whether you’re applying for credit or simply want to know more, we hear you, and we’re here to answer the age-old question of what affects my credit score? Tippla has provided a breakdown below.

what affects my credit score

What is a credit score?

Before answering “what affects my credit score”, let’s first discuss what is a credit score? Your credit score is a number that ranges from 0 – 1,200, based on the information contained within your credit report. Your score falls somewhere on a five-point scale ranging from below average up to excellent. Your credit score indicates to lenders your creditworthiness; the higher your score, the more reliable you appear to a potential lender. 

What is a good credit score?

Due to Experian and Equifax calculating your credit score differently, the categorisation of the “below average” to “excellent” scale differs between the bureaus. 

good credit score

Source: Equifax and Experian

What’s the difference between a credit score and a credit report?

Your credit score is a number falling somewhere between 0 – 1,200, depending on the reporting agency. In contrast, your credit report includes detailed information regarding your credit history. Your credit score is calculated based on the information contained in your credit report. If you’re still confused about “what affects my credit score”, it’s the information contained within your credit report.

What goes onto your credit report

Many things go onto your credit file, and all of this information will have some kind of impact on your credit score. It’s not just your credit accounts that appear on your report; phone bills, personal loans, and payments to utility companies will also feature on your report. 

Your personal finances, such as checking and savings accounts, have little to no effect on your credit score, as your credit report is only concerned with the money you owe or have previously owed. However, in some unique situations, your personal finances may be affecting your credit score.

What affects my credit score? 

In Australia, you have three different credit scores; here at Tippla, we provide you with your Equifax and Experian scores. It’s important to note that these scores may be slightly different, as they are scored on different scales and attribute different values to the contributing factors. 

Here’s what goes onto your Equifax credit report:

  • Type of credit provider
  • The type and size of credit requested in the application
  • Number of credit enquiries and shopping patterns
  • Directorship and proprietorship information
  • Age of your credit report
  • The pattern of credit enquiries over time
  • Personal information
  • Default information
  • Court writs and default judgements
  • Commercial address information

Here’s what goes onto your Experian credit report:

  • Type of credit provider
  • Type of product that was applied for
  • Repayment history
  • The credit limit on each of the credit products
  • Amount of credit enquiries
  • Any negative events

What harms my credit score

When understanding what affects my credit score, it’s equally important to look at what is also harming it. At Tippla, your reports come from the two leading credit bureaus in the world – Experian and Equifax, each of which considers different factors as detrimental when calculating your credit score.

What harms your Equifax credit score: 

  • Late repayments
  • Applying for a large amount of credit in a short period of time
  • Closing a credit account
  • Stopping credit-related activities for an extended period
  • Negative public records, such as bankruptcy

What harms your Experian credit score:

  • A large number of credit applications in a short period of time
  • Open accounts with debt collection agencies
  • Short term credit
  • Missed payments
  • Bankruptcy actions
  • Defaults
  • Court judgements

It is essential that you check all your information listed in your credit report to make sure there aren’t any mistakes that could diminish your score. Specifically, check to see that any of the debts and loans are yours and your personal details such as your name and date of birth are correct. If you find any errors or out-of-date information, contact that credit reporting agency and ask them to fix the mistakes.

What improves my credit score

Whether you’ve just checked your credit score and it wasn’t quite as high as you expected, or maybe you just want it to be even better, you can take steps towards improving it when you know what affects your credit score. Maintaining a good credit score means that you are more likely to be approved for different types of accounts and are more likely to get better interest rates when applying for a loan.

When you receive your scores, you should also be able to see the risk factors impacting your score the most; from this information, you can see where changes should be made and make a conscious effort towards doing so. It should be noted that any actions you take won’t see immediate change, and you’ll need to allow time for your creditors to report your positive behaviour before it is reflected in your credit score.

Tips to improve your credit score 

Changing your behaviour can help improve your score over time. You could start by paying your bills on time, as your previous payment history is an indication of your future performance. You could also ensure that you pay off debt and keep balances low on your credit cards and other revolving credit.

You could also improve your credit score by only applying for and opening new credit accounts as necessary. Taking on unneeded credit can damage your score by creating too many hard enquiries or simply tempting you to overspend and accumulate more debt. 

In addition, applying for too much new credit can harm your credit score because it results in numerous hard enquiries, which remain on your report for two years. 

How to fix my credit score

Now that we’ve answered the question of what affects my credit score? Let’s discuss how you can fix your score. 

Credit repair companies offer to quickly fix your credit score by correcting the visible issues on your credit report. Unfortunately, many of the issues can’t be resolved immediately and are things you could do yourself (for free). By reading through your credit report and understanding your score’s contributing factors, you can change these behaviours to prevent yourself from a further decline. 

An important thing to remember is the time taken to fix your credit score can vary, depending on how severe the negative entry is:

  • Enquiries remain for two years.
  • Late repayments can take seven years to leave your credit report. 
  • Public record items can remain on your report for seven years, but some cases of bankruptcy can stay for ten years.

Rebuilding and improving your credit score does take some time, and there aren’t really any shortcuts you can take. One of the best steps you can do is to check your credit scores with Tippla today; from there, you can review which factors negatively affect your score and then head over to the Tippla Credit School to learn more about improving your rating.

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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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How to Use Credit Cards Effectively: A Guide

how to use credit cards effectively

Millions of Australians have some kind of credit card. But there’s a difference between having a credit card and utilising a credit card. To help with this, Tipple has put together a helpful guide on how to use credit cards effectively.

how to use credit cards effectively

As of November 2020, there were 13,668,490 credit cards in circulation, according to comparison site Finder. These credit cards netted a national debt accruing interest of $20.9 billion. At the same time, the number of debit cards in circulation was more than double, at 34,861,747.

With this in mind, it’s clear that a lot of Aussies are using credit cards to help with their finances. So let’s dive into the ins and outs of credit cards.

What is a credit card?

When you take on a credit card, you are getting a line of credit that you can use to make purchases, balance transfers and cash advantages. Where a debit card limits you to the money you have in your bank account, credit cards are like a loan. This is because they provide you with extra finance which is set at a predetermined amount.

Like a loan, you have to pay back your credit card. At the very least, you will need to make the minimum repayment every month by the due date of the balance.

As highlighted by Investopedia: “Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges, either in full by the billing date or over time.”

Who offers credit cards?

In Australia, there are a lot of options when it comes to credit cards. In fact, there are hundreds of options available. Nowadays, banks don’t offer one type of credit card. They often offer multiple different types of cards all serving different purposes. You can get access to low-interest credit cards, no annual fee credit cards, balance transfer credit cards, and rewards credit cards. 

Rewards cards can vary. A common one is credit cards tied to the frequent flyer points of main airlines such as Virgin and QANTAS.

The benefits of credit cards

With anything in life, there are both pros and cons to having a credit card. Let’s start first with the benefits of credit cards.

Access to extra finance

One of the main reasons people get a credit card is because they want access to a line of credit. A credit card allows you to spend money you might not have in your bank account at that very moment. It gives you the freedom to buy what you want and need without restricting you to your bank account.

This extra line of credit can become especially useful in emergency situations. You can deal with the problem right away and not have to wait until payday. It is very important to highlight that a credit card isn’t free money. You have to pay back everything you spend. So it’s good to be careful that you don’t fall into the trap of overspending and putting yourself into further debt.

Build up your credit score

One benefit of having a credit card is that you could use it to create a good credit history and boost your score. If you make your monthly repayments on time and don’t max out your credit card, then it could boost your credit score.

Rewards

A lot of credit cards have some kind of rewards programs where you can earn bonuses. This can range from frequent flyer points, bonuses tailored to specific stores, cashback and extras such as travel insurance.

Security

Another benefit credit cards can offer is the added security when shopping online. As we recently highlighted, online financial fraud and credit card fraud in Australia is a real threat. This is when scammers will somehow access your card details and use them to shop online.

If you use your credit card to shop online, if scammers do get access to your credit card details, then it’s not connected to the money in your bank account. However, if fraudsters get your debit card details, then they will be draining your personal money.

If you are a victim of credit card fraud, you will most likely not be liable for the money stolen. Generally, once you alert your bank or financial institution about the fraudulent transaction(s), they will freeze your card and reimburse you the funds.

However, there are some situations where you could be liable for the lost funds. For example, if you display your pin obviously on your credit card for all to see, or you took too long to notify the bank, then you might be liable for the fraudulent charges.

In Australia, most credit cards now come with a chip on them, in addition to the magnetic strip. The encryption of chip cards helps to prevent fraudsters from stealing your card information during point-of-sale transactions.

The downside of credit cards

Whilst there can be numerous benefits to having a credit card, there are also a few things to watch out for. Whilst credit cards give you access to extra cash, you do have to pay that money back. 

Fees and interest

When you take on a credit card, depending on which one you select, you might have to pay credit card fees and interest. This means, when you spend money on your credit card, you might end up having to pay back more than you anticipated. 

When you apply for a credit card, you should read the conditions of the card carefully and make sure you can afford the repayments. It’s also important to be aware of what actions trigger fees and interests on your repayment.

Minimum repayments

Most credit cards have a minimum monthly repayment. This is the lowest amount you have to pay in order to meet your credit agreement. The minimum monthly repayment is usually about 2 or 3% of the total amount you owe for the month. 

This means that you don’t actually have to pay your whole bill when you have a credit card, you only have to pay the minimum repayment by the due date to avoid paying late fees. However, you will still accrue interest on the remaining amount owing, which could cost you more in the long run.

Here’s an example of how the minimum monthly repayment works. Say your credit card charges you 10% interest per year and you spend $1,000 on your credit card in one month. If your minimum repayment is 2%, then you would have to pay at least $20 by the due date to avoid late fees. However, the remaining $980 that you haven’t paid will be charged the interest rate, which will cost you an extra $98. 

This $98 in interest will be added to your outstanding balance for the next amount. Then you’ll have to pay interest on the new amount. Taking into account that you’ll probably spend more in the next month, you can see how your credit card debt can quickly get out of hand!

credit card debt

Maxing out your card

Maxing out your credit card is when you reach your credit card limit. Say your credit card limit is $8,000, then maxing out your credit card would be when you spend all of that $8,000 in one month.

When you max out your credit card, you can’t make any more purchases until you make a repayment. Depending on your card conditions, you might incur fees and charges when you max out your card, which means you’ll have to pay even more back.

When you max out your credit card, it means you have a lot more to repay. Even the minimum repayment amount is higher. 2% of $1,000 ($20) is a lot less than 2% of $8,000 ($160). And 10% interest on $980 ($98) is a lot less than 10% on $7,840 ($784). 

If you prefer to pay off your credit card in full each month, then you might struggle to fully repay your credit card bill if you max out your card. Like with anything, it’s important to only spend within your means so you don’t put yourself into a difficult situation.

Rewards programs

Although credit card rewards programs can be a great way to increase your frequent flyer points simply by spending money, it is important to carefully read and understand the conditions of the cards.

Often, cards with rewards programs come with higher interest rates and additional fees. Sometimes these extras can actually offset the benefits that you get through the rewards program. That’s why it’s a good idea to carefully examine the rewards programs and see if it will work out better for you in the long run.

How to use credit cards effectively

With the pros and cons for credit cards outlined, now it’s time to get into how to use credit cards effectively. When it comes to your credit card, you shouldn’t be over-reliant on it. It is a tool that when wielded properly, could greatly benefit your life. However, credit card debt can be a slippery slope.

So how could you use credit cards effectively? You could start off by finding a credit card that meets your needs, whatever they might be. You should read the terms and conditions carefully. It’s important to always keep in mind that whatever you spend, you need to repay.

Keep an eye on your balance

One way to use your credit card effectively is to avoid maxing out your card. You could do this by keeping an eye on your balance. Investopedia outlines that it’s better to keep your card balance low relative to your credit limit. This is because maxing out your credit card can harm your credit score and indicate to lenders that you’re a risky borrower.

As we mentioned above, there are numerous drawbacks to reaching your limit. These include extra fees and charges, the inability to use your card until you make a repayment and higher risk of defaults.

Make more than the minimum repayments

Although you don’t have to pay more than the minimum repayments by the deadline each month, it could work out a lot better if you do. This is because it could save you from being charged extra interest. 

In fact, the best thing you could do is to pay off your credit card in full each month. That way you won’t be charged interest on the remaining debt, and you won’t carry credit card debt into the next month.

Pay your credit card bill on time

Each month, you will receive your credit card bill, outlining all of the transactions you’ve made during the month. Once you receive your statement, you will have a fixed time to pay off your credit card, or at the very least, make the minimum monthly payment to avoid late fees.

When it comes to your credit card, it’s important to pay your credit card bill on time. If you don’t you’ll most likely have to pay late fees and in some cases, extra interest. Not only that, but it could be good for your credit score. Even if you have a credit card that has 0% interest or 0% balance transfer terms, these will likely become void if you are late making your repayments.

Your repayment history is one of the most important factors when it comes to your credit score. If you don’t pay your bills on time or miss them altogether, it could harm your credit score. Therefore, one way to use your credit card effectively is by paying your bill on time.

Be on the lookout for credit card fees

You can incur credit card fees for a number of different reasons and they can add up over time. That’s why it’s important to know what fees you can be charged with your particular card and what triggers them.

credit card fees

Credit cards and your credit score

Your credit score is based on your credit history. Good credit behaviour can improve your rating, as can bad credit behaviour. If you are to miss a credit card payment, then this will show up as a default on your credit report and negatively affect your credit score.

How to use your credit card effectively

There are a lot more aspects to credit cards than meets the eye. There are many things you could do to make sure you’re getting the most out of your credit card. You could repay your credit card in full each month, avoid over-relying on your card, make sure to pay off your bill each month on time and more.

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Frugal Hacks for 2021 | Prepare For The End Of JobSeeker

frugal hacks 2021

Make saving money fun with these frugal hacks for 2021!

frugal hacks 2021

We’re well into 2021 (where did January go?). Now that Christmas and the holiday period is over, it’s time to think about saving money to set up our future self for success. There are so many different ways you can save money. But we’re here to make saving money fun with these 10 frugal hacks for 2021!

Saving during the COVID-19 pandemic

The coronavirus pandemic was especially good for Australian households. In the second quarter of 2020, the Australian household savings rate reached an all-time high of 22.10%.

According to the Australian Bureau of Statistics (ABS), this is because consumer spending dropped amid lockdown measures coupled with boosted social assistance benefits, such as JobSeeker and JobKeeper.

With JobSeeker set to end on the 31st of March 2020, Aussies won’t be able to rely on the extra cash. That’s why it’s good to get into some healthy and easy habits early, so you can still save money into 2021. 

Back to basics: set up a budget

Before we get into the savings hacks, we’d like to highlight the importance of a budget first. If you’re wanting to save money, it’s a good idea to have some kind of budget in place. There are many budgeting options available for you.

When it comes to what type of budget you should choose, well that decision is up to you. The most suitable budget for you will depend on your life circumstances and your savings goals.

There are many different budget hacks you can try to make your budget stick. You could download a savings or budgeting app that will help you sort out your expenses based on categories. You could try and set limits for certain categories, such as eating out, alcohol, exercise, etc.

10 Frugal Hacks for 2021

Let’s get stuck into the frugal hacks you could try this year, to increase your savings and set your future self up for success.

Make a grocery list before you shop

Do you hate the hassle of going to the grocery store? Trekking up aisle after aisle. Reaching over people to get what you want. Socially distance in the narrow aisles. It can be a real chore. So why not reduce the time you’re there?

There are two ways you can do this. You could make sure you have your grocery list written down and ready to go before you head to the shops. That way when you arrive, you know what you need. You can get in and out quickly. When you have a shopping list you’re also less likely to buy things you don’t need – even if Tam Tams are on sale! Writing a grocery list can save you time and money.

Order your groceries online

Want to take it one step further and avoid the aisles of the grocery store altogether? Why not order your groceries online. Most of the supermarkets allow you to order your groceries online. This way you don’t have to walk up and down the aisles. You can choose your food and items from the comfort of your own home. You could either get them delivered or if you want to save money, pick them up from the supermarket at a designated time.

Meal prep, or cook in bulk

The 5 Ps – prior preparation prevents poor performance can be applied to this next saving hack – meal prep or cook in bulk. You would be surprised how quickly buying lunch at work adds up. 

One easy way to save money is to meal prep. When you have a free moment on the weekend, you could make a big dish – perhaps a curry, stir fry or something that’s easy to make in bulk. Whatever you choose, you can freeze all of the different meals and then take them during the week for lunch. Then you can save money on buying lunches out. Nothing beats a home-cooked meal, right?

If you don’t have time to make a few dishes over the weekend or whenever you have your day off, there’s another hack you could try. Have you ever ordered at a restaurant? Take that principle and apply it to your cooking – make more than you can eat in one sitting. That way you’re guaranteed to have leftovers and you can take the leftovers for lunch the next day, or even the day after!

Buying in bulk – it’s not just for toilet paper

Just like cooking in bulk and freezing the leftovers is a good way to save money, so is buying in bulk. It often works out to be cheaper to buy non-perishable items in bulk. If you buy products that you use regularly, such as toothbrushes, toilet paper and detergent, they are often much cheaper when you buy them in jumbo sizes.

When you buy in bulk, instead of only buying products when you need them, time is on your side. This means you can wait until an item is on sale to buy enough to last you for a few months, instead of being forced to buy something at full price because you’ve run out.

Reduce your takeout coffee, embrace water

Just as buying your lunch out every day can hurt your wallet, so can buying a coffee every day! According to Statista, in 2019 the average price for a latte in Australia was around 3.96 Australian dollars per cup. If you buy one coffee a day, then that adds up to $19.8 a week. Assuming there are 4 weeks in a month, that’s $79.2 your spending on coffees each month. 

Bringing a coffee from home, buying coffee sachets in bulk or having instant coffee (it’s not that bad) could save you a lot in the long run. Alternatively, you could embrace water! It is good for you, it’s refreshing and the best part of it all – it’s free! What more could you ask for?

Do you remember the library? You should go there!

Do you remember that room filled with books, DVDs and computers? You probably would have had one at your school, you might have even visited one out in the wild. It’s called a library, and many towns and cities have public libraries.

Why is this good? You can rent books, DVDs, audiobooks and more from your local library and it won’t cost you anything. Most libraries will allow you to extend your rental if you don’t finish what you’re reading or watching. Some libraries don’t even have fees for returning your items late. Instead of buying a book at full price at a bookstore, or renting a movie from iTunes, so can rent it free from the library. Another perk, when you move house, you won’t have to cart kilos of books with you.

Alternatively, if you are one of those people that love to keep books when you’re finished reading them, why not try and go to a secondhand bookstore? Secondhand bookstores are becoming increasingly popular and well-stocked. Because of this, many secondhand bookstores have all the books commercial bookstores have, but often for half the price.

Go old school and get yourself a piggy bank

You might not have had a piggy bank since you were a kid, but it’s time to bring them back. A piggy bank is perfect for any loose change you might have lying around. Although annoying, those 5 cents coins can add up after a while. So instead of putting them into your local cafe’s tip jar, why not tip yourself? After a few months, you might start making real progress. You could put that spare change into your savings account, or put it towards your bills, groceries – it’s up to you!

Use fashion to help save money

Another frugal hack you could use to increase your savings is by utilising the power of fashion. How can you do this, you might ask? One savings hack is to buy clothes in neutral colours, so you don’t have to buy as many. Neutral colours go with everything, and they often aren’t the stand out of an outfit, so you can wear them multiple times without people realising it’s the same outfit.

Another thrifty hack could be to visit second-hand clothes stores before heading to the shopping centres for a new outfit. Perhaps you might find just what you need for half the price.

On the flip side, instead of donating your clothes, or throwing them in the bin, why not try and sell your clothes? Even if you get less than what you paid for, it’s still more than what you would get if you threw them out. Something is better than nothing.

Create a candle oasis – be energy conscious

You’ve probably heard this time and time again. Turning off the lights when you leave a room can save you money. Whilst that’s true, it’s not exactly enjoyable. Turning off lights when you leave the room, your air-con or heating off when you leave your house or switching appliances off at the switch are all great ways you can reduce your energy bill.

But how about taking it one step further? Turn off all of your lights and create a cosy candle oasis. This is way more fun, and also a great way to save money! You don’t have to do it all the time. You could even try it once a week, once a month – whatever you want.

Utilise cashback deals and discount codes

If you’re looking at buying something specific, it could be beneficial to look at the numerous cashback and discount websites, such as OzBargain, to see if the item is on sale anywhere, or if you can get money back on your purchases.

Want a new dress but it’s not urgent? You could wait until there’s a cashback for leading fashion brands and purchase your dress during the deal. Want a new blender? OzBargain is showing it’s on sale at Harvey Norman. Doing your research before you buy something, or choosing to buy from stores with cashback deals going could save you a decent amount of money, particularly if you do it often.

Go forth with these frugal hacks for 2021

Although January might be behind us, it’s not too late to implement some good habits and save money in the process. You could use the above 10 frugal hacks to boost your savings and set your future self up for success. It’s not as hard as you think.

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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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How To Improve Your Credit Score? A Quick Guide

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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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The Dos and Don’ts of Credit

dos and don'ts of credit, credit score

Taking out credit, whether it be a credit card, loan, or mobile phone, can have more implications than you may realise. Unfortunately, these effects aren’t commonly talked about, so you could be harming your credit score without even realising it.

Your credit score is an important number, and it’s one of the benchmarks used to determine your financial health. Taking out credit can be good for your credit score, but it can also have a negative impact. It all depends on how you go about it.

Taking on too much credit or applying for multiple types of credit in quick succession could harm your credit score, which can cost you more in the long run. In order to help you avoid this, we’ve put together the dos and don’t of credit.

What is credit?

Before we dive in, let’s go over one important bit of information – what is credit? As defined by MoneySmart, “Credit is money you borrow from a bank or financial institution. The amount you borrow is debt. You will need to pay back your debt, usually with interest and fees on top.”

Examples of credit include: 

  • Credit card;
  • Loans – personal (secured and unsecured), car, mortgage, business, student and more;
  • Buy Now Pay Later services;
  • Mobile phone;
  • Internet;
  • Electricity or gas;
  • Water.

Your credit score, or credit rating, is a number ranging from 0 – 1,200. The role of a credit score is to indicate to credit providers your creditworthiness, which essentially means how risky of a borrower you are. 

A good credit score indicates that you are effective at managing your debt and likely won’t default on your credit. A bad credit score shows that providing you with credit will be more of a risk to the provider. The better your credit score, the more likely you will be approved for credit.

Dos

Taking out credit can be beneficial for your credit score. In fact, you need to have taken out some form of credit in order to have a credit score. So how can you use credit for good?

Make your repayments on time

Your repayment history is one of the ingredients which contributes to your credit score. According to Equifax, your repayment history makes up 30% of your credit score – the second-biggest contribution behind only credit enquiries.

Because of this, whether you make your repayments on time could make a big difference to your credit score. So how can you make this work in your favour? Well, you could ensure that you always make your repayments on time.

There are a number of ways to do this, such as streamlining all your repayments to come out at once, setting up direct debit repayments or adding notifications on your phone. 

Make more than the minimum repayments

Did you know that if you only pay the minimum amount due on your credit card that carries interest, you’ll actually end up paying more money in the long term? It’s true! 

When you take out a credit card, you’ll need to make a minimum payment each month, which is usually about 2 or 3% of the total amount you owe for the month.

However, when you only pay back the minimum amount, depending on how much you owe, you could end up having to pay back the outstanding balance for years. This means you could be stuck with credit card debt for years, even when you’re not using it anymore!

Think of it like this: your credit card charges you 10% interest per year and you spend $1,000 on your credit card in one month. Your minimum repayment is 2%, meaning you would have to pay a minimum of $20. This means that there’s still $980 that will be charged the interest rate, which will cost you an extra $98. 

The next month, the interest you’ve been charged will be added onto your outstanding balance, and then you’ll have to pay interest on the new amount. Add on the fact that you’ll probably spend more in the next month, you can see how your credit card debt can quickly get out of hand!

credit card debt

Keep your line of credit open even when you’re not using it

Keeping your line of credit open, even when you’re not using it, might sound contradictory at first, but it could help boost your credit score. Why is this you may ask? The age of a credit account can contribute positively to your credit score.

Paying your credit bills from a specific account consistently showcases that you have been capable of dealing with this credit account for a long time. This serves as a good indication for a future credit provider that you are likely to handle credit well. 

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. You don’t have to go into debt to contribute to your credit history. Instead, you could make smaller purchases with your credit card and fully pay off your debt whenever needed. 

In addition to keeping your line of credit open, having different types of credit can also be beneficial for your score. This is because it shows providers that you’re able to handle multiple credit accounts perfectly fine. At the end of the day, that’s what credit providers care about – that you can manage your debt well, and you’ll make your repayments on time.

Find the best interest rates

This might seem like a no brainer, but interest rates can really make a huge difference in terms of how much money you’ll end up paying overall across the duration of your credit. Even a 0.5% difference in an interest rate can cost you thousands over the course of a year.

Take this as an example, the average home loan in Australia is $388,100. If you borrow that amount at 5% interest over 25 years, you’ll pay $292,539 in interest over the life of the loan. But if you borrow the same amount at 5.5% instead, you’ll pay an extra $34,344 in interest!

Because of this, you might want to aim for credit with the lowest interest rates and fees when you apply for credit. If you’re not sure what’s the best option, you can seek the advice of a financial advisor, who can help you make the best decision for you.

Frequently check your credit score

Your credit score changes frequently. Credit providers report to credit bureaus once a month, but not necessarily at the same time. This means your score can change frequently. 

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

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

Don’t

We’ve given you a number of things you could do to protect or even boost your credit score, but what are some things you might want to avoid?

Make multiple credit enquiries in a short space of time

When you apply for some type of credit, such as a loan or credit card, before approving your application, the provider will take a look at your credit report to see how risky of a borrower you are. This request is recorded on your credit report as a hard enquiry and it will usually impact your credit score.

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

Hard enquiries on your credit report can symbolise different things to different lenders. For example, multiple hard enquiries might look like a number of financial institutions have rejected you. Therefore, they themselves may be more likely to reject your application. To be safe, know your options before you dive deep into the world of credit. 

On the other side of the coin are soft enquiries. A soft enquiry is when you request a copy of your credit report or check your credit score. Soft enquiries don’t harm your credit score, and they’re not visible to potential lenders when they check your report after you make a credit application. A soft enquiry will stay on your credit report from 12 to 24 months.

Take on unnecessary credit

Your credit score is based on how effectively you can manage debt. One way to harm your credit score is to let your debt get out of your control. Therefore, one thing you could do to avoid harming your rating is to avoid taking out unnecessary credit.

If you’re taking out a loan to pay for something that you don’t necessarily need or you can’t really afford, then you might be living above your means. Before taking on credit, you should ask yourself if this is something you both need and can afford.

In a similar vein, maxing out your credit accounts can hurt your credit score. Just because you have an allocated credit limit, doesn’t mean you should use all of it. Using your full borrowing capacity may affect your credit score and indicate to credit providers that you may be at a higher risk to struggle financially in the future. 

Lose track of your repayments

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 5 years, which means any time you apply for credit, the provider will be able to see that you defaulted in the past and that might lead to them rejecting your application.

Prioritise long-term loans

If you’re looking for a loan, it can seem like a smart idea to take out a longer-term loan with a lower interest rate and an overall lower monthly repayment. However, this isn’t always the cheaper option. 

Even if you end up paying less each month, because you’re having to make your repayments for longer, you might end up paying more overall. Ultimately, taking on a longer-term loan means that you are committed to making your monthly repayments for more time. If your financial situation was to change throughout the duration of the loan, this could make it difficult to make the repayments.

When taking out any form of credit, it’s important to do your research and calculate the total costs you’ll incur across the duration of the line of credit and not just the monthly repayments. If you’re ever in doubt, you can reach out to a financial adviser who can help you navigate your finances.

Want to know more?

There’s a lot of mystery when it comes to credit scores and the nitty-gritty details can be confusing. However, following the above dos and don’ts could help you get started on improving, maintaining or even building your credit score!

If you want to learn more, Tippla has you covered! Our Credit School is a free online resource which will guide you through all of the information you need to know about your credit scores and reports. So what are you waiting for? Let’s get credit-score savvy!

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Credit Score FAQs: You Asked, We Answered

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There is a lot of uncertainty surrounding credit scores, so we’re shining the light on the situation and answering some of your most frequently asked questions.

credit score, credit rating, FAQ

Your credit score is an important number that can affect multiple aspects of your life. However, 73% of Australians don’t know their credit scores or why they are important. Because of this, there’s a lot of mystery and uncertainty surrounding credit scores. 

It’s time to pull back the curtain and shed some light on credit scores. What is a credit score? What’s the difference between your credit score and credit report? How can you improve your credit rating? All of this and more will be tackled in this article.

What is a credit score?

Let’s start off with the most frequently asked question – what is a credit score? Your credit score, which can also be referred to as a credit rating, is a number ranging from 0 – 1,200.

The role of a credit score is to indicate to credit providers, such as banks, finance companies and utility providers, your creditworthiness. In other words, it reveals how risky of a borrower you are. Your credit score is based on a five-point scale: excellent, very good, good, average and below average.

A good credit score indicates that you are effective at managing your debt and likely won’t default on your credit. A bad credit score shows that providing you with credit will be more of a risk to the provider. So, the better your credit score, the more likely you will be approved for credit.

One thing that’s important to highlight is that you actually have more than one credit score. In Australia there are 3 different credit reporting agencies – Equifax, Experian and CheckYourCredit (illion). Each of these have a separate credit score for you.

So, to answer the question, a credit score is a numerical representation of your creditworthiness. Your credit score is likely to change across your lifetime, so it’s important to know what your credit score is and why they change.

You’ve probably heard the saying knowledge is power. When it comes to your credit score this couldn’t be more true! When you know what your credit score is, and how to improve it, it could help you to negotiate better deals with your existing credit facilities, or when you’re applying for new credit. This brings us to the next commonly asked question…

What affects your credit score?

Now you know what your credit score is, the next question that follows is, what affects your credit score? Your credit score is based on the information on your credit report. What’s your credit report? We’ll answer that in a moment! 

Your credit rating is influenced by a number of factors. These include your previous repayment history, how many credit accounts you have or have had in the past, and how often you apply for credit.

It’s important to address here that when we say credit, we’re not just talking about a loan or a credit card.  As defined by MoneySmart: “Credit is money you borrow from a bank or financial institution. The amount you borrow is debt. You will need to pay back your debt, usually with interest and fees on top.”

Examples of credit include: 

  • Credit card;
  • Loans – personal (secured and unsecured), car, mortgage, business, student and more;
  • Buy Now Pay Later services;
  • Mobile phone;
  • Internet;
  • Electricity or gas;
  • Water.

Previously, your credit scores were only based on so-called negative reporting. This meant that if you missed a payment, it would be reported to the credit bureaus and a negative entry would appear on your report.

Whilst this is still true – if you default on a payment it could be reflected on your credit report and your score could be negatively affected. However, from 2018, Australia uses the Comprehensive Credit Reporting (CCR) which now includes positive behaviour being reported to your account for rental agencies and utility providers. While not all rental agencies and utility providers report to credit bureaus just yet, this is looking to be more of a trend in the future.

What is a good credit score?

Having a good credit score could open a world of opportunities. Generally speaking, when you have a good credit score or higher, you could have access to better credit terms such as lower interest rates and fees.

For example, the average home loan in Australia is $388,100. If you borrow that amount at 5% interest over 25 years, you’ll pay $292,539 in interest over the life of the loan. But if you borrow the same amount at 5.5% instead, you’ll pay an extra $34,344 in interest! The extra half per cent interest doesn’t sound like much, but it has a massive impact.

So what is a good credit score? Well, it varies across the different credit reporting agencies. For Experian, a good credit score starts at 625. Technically, a good credit score is from 625 – 699, anything higher than this is either a very good or excellent credit score. When we refer to a “good” credit score, we’re referring to a score that’s either good or better.

For Equifax, a good credit score starts at 622. You can see an exact breakdown of the different credit scores below. We also did a dedicated article to what is a good credit score, which you can check out here.

Equifax and Experian credit scores

Source: Equifax and Experian

What is the difference between a credit score and credit report?

Your credit score is a number which can range from 1 digit to 4, depending on where you fit on the five-point scale. Your credit report, however, contains detailed information on your credit history.

Your credit history includes any interaction you’ve had with credit before, whether you’ve taken out a loan, have a credit card, or rent a place and have to pay for your electricity.

What goes on your credit report?

The specific information that’s included in your report includes your repayment history, which type of accounts you have or have had in the past, how many applications you’ve made for credit, whether you’ve defaulted on a payment and more.

Your credit report contains a mix of information about your previous financial behaviour. This includes: 

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

Each credit bureau uses a slightly different algorithm to base your credit score off. For a full breakdown on what exactly goes into your Equifax and Experian credit reports, head back to school with Tippla’s Credit School – a short online course which will guide you through all the information you need to know about your credit scores, including what exactly goes into your credit report!

What goes on your credit report and how long does it stay there? Here’s an overview:

  • 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 

How can you improve your credit score?

So now you know what a credit score is, and what goes onto your credit report, how can you use this knowledge to improve your credit score? 

Fixing your credit score can’t be done overnight – but it definitely can be done! Time and consistent positive behaviour could help you boost your credit score and get access to the VIP credit offers.

Before you can fix or improve your credit score, you need to know where you’re at so you know what you’re working with. The next step would be to understand your credit score and report and know what affects your score. Luckily for you, you’ve already completed this step!

Now that you know your credit score and what influences your number, you could do the following things to improve your score.

Pay off your current credit debts

Effectively managing your debt is the key to a good credit score. If you’re behind on your payments, one way to improve your credit score could be to get on top of and stay up to date with your debt. Once you’ve achieved this, staying on top of your debt could help maintain any ground that you’ve gained!

Reduce your debts

If you are struggling with managing your debts, you could look at trying to reduce your debts. There are two main methods – the snowball system and the avalanche system. The snowball method is when you organise your debts from largest to smallest amount, and focus on paying more towards the smallest debt whilst still making the minimum payments towards your other obligations.

The avalanche method is when you organise your debts by interest rates and put more resources towards paying off your debts with the highest interest rates first. The avalanche method might take you longer, but it could help you save more money in the long run.

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

Pay your bills on time

Similar to the above, paying your bills on time could help you improve your credit score. If you can consistently show that you’re able to pay your bills on time, it indicates that you’re responsible with your finances – which is what credit providers care about! There are a number of ways you could make this easier for yourself. Some examples include setting up a budget, streamlining your payments so they all come out at the same time, setting yourself reminders, setting up a direct debit for your bills and more!

Find the best interest rates

Interest rates can make a big difference when it comes to how much money you will have to pay over the duration of your credit. As we highlighted before, even a 0.5% difference in an interest rate can cost you thousands over the course of a year.

Because of this, when applying for credit, you might want to aim for credit with the lowest interest rates and fees. If you’re not sure what’s the best option for you, you can seek the advice of a financial advisor, who can help you make the best decision for you!

Diversify your credit

Having more than one type of credit shows to credit providers that you are capable of handling multiple credit accounts perfectly fine. Repaying your debt on time might not only improve your credit score but signal to credit providers that you are good at managing your finances.

Space out your credit applications

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. Too many hard enquiries in close succession could damage your credit score as it implies that you’re in a bad financial situation and in need of extra money. 

To avoid this, it could work out better to space out your credit applications over a few months and let your score recover in between. This could help you get better interest rates and protect your credit score in the long run. 

Check your report for mistakes

Last but not least, one way you could improve your credit score is by frequently checking your credit reports for mistakes. 1 in 5 credit reports have some kind of error on them, which could damage your rating. So it’s best to keep an eye on your reports and check to make sure you’re rating isn’t damaged because of a mistake!

Don’t have a credit score? No problem! We’ve already put together a guide on how to build your credit score from scratch.

What do credit providers see when they look at your credit report?

What you see on your credit report and what providers see when they check your report are two different things. So what can creditors see when they look at your report? For example, when you request to see your credit report, for security reasons only you can see who has accessed your report and when. Potential lenders and credit providers can’t see this when they make a hard enquiry on your report.

Aside from that, creditors can see your personal information, repayment history, your current credit accounts and more.

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

christmas spending, christmas saving, credit score

How can you avoid a Christmas hangover debt?

christmas spending, christmas saving, credit score

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

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

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

The price of Christmas

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

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

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

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

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

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

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

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

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

Avoid: maxing out your credit card

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

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

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

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

How can you cut costs over Christmas?

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

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

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

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

Avoid: relying on Buy Now Pay Later 

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

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

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

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

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

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

Avoid: Missing bills or repayments

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

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

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

Avoid: Failing to budget

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

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

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

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

Avoid: Neglecting your credit report

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

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

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

Start 2021 on the right footing

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

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

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

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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!