Payment default entry
Non-payment of a debt or bill may result in a payment default entry in your credit data file.
The credit information company will send you notification of the first payment default entry registered in your name. This means you cannot be given the first entry without being aware of it. Notices of any subsequent entries are not necessarily sent.
Payment default entries are governed by the Credit Data Act.
You can get a payment default entry in your data credit file if a consumer, hire purchase, overdraft facility or credit card payment is late by more than 60 days from the original due date, the possibility of a payment default entry has been mentioned in the credit agreement and a written demand for payment has been sent to you at least 21 days before the payment default entry is registered.
A debt collection judgment given by a court always results in a payment default entry.
If your income is so small that it cannot be garnished, a payment default entry always results. You can also get a payment default entry if you have debt being collected in enforcement and collection has continued for at least 18 months during a period of two years.
A payment default entry always ensues from municipal social credit, a restructuring loan guaranteed by the Guarantee Foundation or from debt adjustment for private individuals. Some creditors may also require a payment default entry to be made for long-term payment agreements.
The fact that a debt is transferred to a collection agency does not yet result in an entry.
A payment default entry generally remains in the credit data file for 2 – 4 years. An entry is erased after two years if you have only one payment default entry and you pay off the debt within two years. A new payment default entry may prolong the duration of the previous entry.
This means that a payment default entry is not erased even if you pay off the debt. However, you may request the credit information company to make a note in conjunction with the entry to the effect that payment has been made. For this, you must submit information about having made the payment, for example a certificate issued by the creditor that the debt has been paid off, to the credit information company.
When you restructure your debts through social credit or by means of a payment agreement with the creditor, the filing and duration of a payment default entry are generally subject to separate agreement. For a restructuring loan guaranteed by the Guarantee Foundation, a payment default entry usually lasts for two years and for debt adjustment for private individuals for the duration of the payment schedule.
Erasure of the entry does not mean that your outstanding debt disappears. A debt can be collected until it has been paid off or has expired. If the creditor reinstates collection through enforcement, this may result in a new payment default entry.
A payment default entry makes your life difficult in many ways, because your credit information is checked when you make various agreements.
When you have been given a payment default entry:
- Your credit card will be cancelled and you will be unable to get a new one.
- You will be unable to buy things on hire purchase.
- It will be more difficult to obtain a bank loan, study loan and consumer credit.
- It will be more difficult to obtain rental housing, a telephone subscription, internet access and insurance becomes. You may be required to put up collateral or to make advance payments.
- It may be more difficult to get a job if it involves financial responsibility.
Even if you have a payment default entry, you have a right to basic banking services, such as online banking access codes and a payment card which only allows payments taken directly out of your account. If you have paid your rent on time, a payment default entry will not generally prevent you from obtaining rental housing from, for example, a municipality or from a social rental housing provider.
You can avoid a payment default entry by paying bills and debts on time. If you have difficulty in paying your bills or debts on the due date, you should contact the creditor in good time and try to agree a new payment schedule.
Putting in place a voluntary personal credit lock enables you to control the amount of credit granted to you. You can place a personal credit lock by contacting your credit information company. A personal credit lock is subject to a charge. It is valid for a period of two years and you can remove it if you wish.
It is advisable to put in place a voluntary personal credit lock if you suspect that someone is using your personal data to buy goods on credit or in a credit search, for example. A credit lock reduces the risk of identity theft as lenders see the lock and verify the credit applicant's identity.
A personal credit lock can also be an effective way to prevent a debt problem because it makes it difficult to obtain new debt.
Suomen Asiakastieto Oy and Bisnode Finland Oy, whose activities are based on the Credit Data Act, maintain credit data files. You can check your bad credit record free of charge once every 12 months by requesting an extract from the credit data file. The extract from the credit data file shows you what information about you is stored, how long entries are kept and who has enquired about your credit data.
Suomen Asiakastieto Oy and Bisnode Finland Oy also have fee-paying services for checking credit data.