The Credit Savvy team have found that Australians are 150% times more likely to default on personal loans taken out before Christmas than at any other time.
We’ve looked at research performed by our credit reporting agency, Experian – on credit trends over the last two years, which also shows there is a 10% spike in Aussies applying for personal loans in the December quarter.
It’s a similar story with credit cards – there’s a 10% increase in defaults for credit cards taken out at this time of year.
It’s a good idea to consider the potential effects on your credit score as a default can remain on your credit file for five years, and any missed repayments leading up to the default can also be recorded for two years.
With all the gifts and holidays happening at this time of year, it’s no surprise that there’s a need for credit, however there are ways of going about it that minimises the impact to your credit reputation:
Credit Savvy’s Seasonal Tips
- Work out how much you can afford to borrow and realistically pay back each month so that you don’t overextend yourself financially.
- Do your homework first using free online resources such as calculators and side by side comparison of loans and credit cards.
- Make sure you’re getting a competitive interest rate – there are even personal loans available which reward higher credit scores with better interest rates.