Debtors Ask “If I don’t pay, what can happen? Will it affect my credit score? What is a credit score?”
Creditors ask “Can we default the debtor? Do we need to remove the default? Its disputed what do I do?”
I am asked questions like this by debtors and creditors respectively. Typically, if you are a member of a credit agency then you should refer to the terms of your agreement with them first. Generally however, for debtors: If you don’t pay a creditor, then the creditor can take steps to report the default in payment. This can affect your credit score which will cause problems when applying for credit.
For creditors: If you are a member, your credit reporting needs to be accurate and not misleading – be careful with listing defaults if there might be a dispute and if a default may not be warranted as this may be considered misleading and capable of consequences pursuant to your agency terms.
A great article recently published by ASIC and Moneysmart has great information about the (new) credit reporting regime and how it might affect you if you’re a debtor, and how you might report debtors if you’re a creditor. Click here to read the article and answer many of your questions about credit scores and credit ratings.