Consuming and shopping can be a great fun, especially if you do have the money for it. But, if the shopping is funded by debt financing, such as credit cards or installment plans, excessive shopping can have unpleasant after-effects. The money may not be enough for other necessary expenses. And in the worst case, if the consumption bills are not handled on time, the credit information company may register a payment default entry. Payment defaults may significantly reduce future shopping desires, but they also have other significant effects. For example, renting an apartment, buying a car, acquiring an internet or mobile connection, or even when applying for a work (position with access to company’s funds), gets much more difficult if the person has a bad credit history.
In Finland there are two credit information companies that uphold the default registry. These companies are Suomen Asiakastieto Oy and Bisnode Oy. The number of registered payment default entries has increased greatly in recent years. For example, in 2009 payment default entries were registered for 300 000 persons, and in 2013 already for 360 000 persons.
The main reasons for payment default growth have been the economic downturn, the growing web shopping phenomenon, and also the so-called microloans. There are many amazing and sad stories behind people with payment defaults, and some of them are even tragic. But mainly the reason is negligence with the money behavior.
What is the chance that I will get a payment default? The possibility in practice is quite small, if you just remember few things in debt management. Careful and systematic use of money is the most important thing. However, if you are delayed with paying the invoice, there is no cause for immediate concern. Consumer payment default can be registered only after 60 days has elapsed since the original due date. Also the creditor has to send couple or reminders to the debtor. It is recommended that if the payment is late, you should immediately try to agree a new due date. Or if your financial situation is poor, you can always try to agree a payment program. Usually debtors are more willing to settle things this way instead of starting the collection. If you just do not bother to respond to reminders of creditors, payment default may then be unavoidable.
To sum up, if you consider your consumption behavior with reason, and by taking the responsibility of your own finance and invoices, the risk of becoming an entry in payment default register, is minimized.