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How to avoid a credit black mark

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A timely reminder not to be silly during the silly season:

AUSTRALIANS who apply for credit in December are at a greater risk of being left with a black mark against their name.

Latest data from credit reporting agency Veda shows over the past five years the rate of credit defaults has risen in the December quarter.

Veda spokeswoman Belinda Diprose says consumers often turn to credit at Christmas time to help fund their excessive festive spending.

"What happens to these people in the new year is that there's an 8.5 per cent increase in the default rate," she says.

"This indicates people are overextending themselves and putting themselves into debt stress early in the new year."

Veda data also shows credit card application inquiries climbed by 10.3 per cent over the last five years in the December quarter.

Diprose says credit defaults occur when a customer fails to meet a payment that is more than $100 and is at least 60 days overdue.

This can extend to mortgage repayments, car loans, personal loans and utility bills.

Despite a drop in credit application inquiries - which fell by 5.6 per cent between January and October - Diprose says consumers should avoid overspending during the Christmas period and reduce their risks of running into financial trouble in 2013.

"It's easy to get caught up in spending, so it's really important for people to keep a handle on the amounts they are spending," she says.

"I don't think people realise the long-term impacts on their credit history if they do have a default.

H&Y have specialist consultants dealing with credit defaults and refinancing. Make sure you talk to us before the problem gets out of hand. Some handy tips from reporting agency, Veda:

TIPS TO PREVENT DICING WITH DEBT

* There are so many cards and loans on offer so ensure you research which one is best for you.

* Make a list of your credit card spending and crosscheck it with your budget.

* Keep a handle on what you owe.

* Pay on time and save interest charges.

* Stay up to date with your credit rating.

Source: Veda

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