Credit note

A credit note, also known as a payment remark, is a registration of a person or company as a bad payer. This can happen both internally in the company's systems or externally via debt registers such as Experian's RKI or Debitor List. Credit notes are of great importance as they can affect creditworthiness and future opportunities to obtain credit.

How is a credit report registered?

Companies can register an internal note in their own financial system or ERP solution. This allows sales and accounting to adjust credit terms, such as reducing the credit period, lowering the credit amount or demanding cash payment. Internal notes typically arise from poor payments or unpaid invoices that may have been sent to collections.

External credit notes registered in debt registers such as RKI or Debitorlisten also allow other companies to access information about bad payment history without having had previous business relations with the customer. It is usually required that the company is a customer of the debt register in question in order to register a credit report.

In Denmark, it's often lawyers or debt collection companies that report remarks to debt registers on behalf of creditors.

The purpose of a credit note

The purpose of a credit note is to protect businesses from potential losses by alerting them to a customer's poor payment history. With this information, a business can adjust their payment and credit policy for that customer, for example, by demanding cash payment or reducing the credit period. Credit reports thus help businesses minimize the credit risk of financial loss.

In Denmark, around 200,000 private individuals and companies have a credit record with a debt register, making it an essential part of companies' credit assessment processes.

What are the consequences of a credit report?

A credit report can have serious consequences for both individuals and businesses. The most common consequence is a lower credit score, which can make it difficult to get approved for loans or credit from banks. In addition, businesses may choose to reject credit applications or demand cash payment for goods and services from customers registered with a reputation.

When can a credit report be registered?

To register a credit note with a debt register, the creditor or debt collector must have sent at least three reminders. The last reminder must state that the customer will be registered as a bad payer if payment is not made. Public authorities must also wait four weeks from the warning before they can register a remark.

How long does a credit report last?

A credit note usually remains registered for up to 5 years in the debt register. If the debt is paid, the creditor or debt collector will immediately inform the debt register and the note will be removed. If the debt is not paid, the note will remain in the register until the period expires.

Can a credit note expire?

Yes, a note is time-barred after 5 years. However, this does not mean that the debt disappears - the creditor can still have a claim against you even if the note itself is deleted from the debt register. It's also important to note that you cannot be registered for an outdated claim.