Does reversing a debit order impact your credit score?

You are in control of your debit orders. An organisation is not allowed to enforce a debit order without your express consent and, if you’re dissatisfied, you’re allowed to reverse or stop it.

However, what does this mean for your credit score? We have a look at how you can stop or reverse a debit order, and we then consider how it may impact your credit score.

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How to intervene with your debit orders

Brendan Michie, director and attorney at Hammond Pole Attorneys, says that you need to distinguish between stopping and reversing a debit order.

“If you want to stop any future debit orders, you need to provide an instruction to your bank to place a stop payment on the account in question. This would stop all future debit orders that relate to your specific instruction,” says Michie.  

He explains that every bank will have a different process for implementing the stop order. You should reach out to your bank to find out what their process is.

“It’s important to note that if you have contractual obligations with the third party receiving the debit order, there may be ramifications – both legal and contractual – in unilaterally stopping the debit order payments,” says Michie.

He recommends liaising with the third party receiving the debit order payment, prior to making arrangements to stop it with your bank.

Michie says that you can also instruct your bank to reverse a debit order already processed by disputing it with the bank. 

“This is normally done in instances where the debit order was not authorised, you stopped the payment, the debit order is not going off on the agreed-upon date, or the amount of the debit order is not what was agreed to,” says Michie.

He adds that a bank may also ask for reasons for the debit order being disputed and reversed, before taking action.

READ MORE: How to pay your bills on time and save your credit score

What does this mean for your credit score?

Your credit score won’t be impacted if you stop or reverse an incorrect debit order.

“However,” Michie notes, “if cancelling the debit order means you fall into arrears with a credit agreement, such as a home loan or personal loan, then it’s likely that this will be recorded on your credit score.”

Michie therefore advises carefully considering this before stopping a valid debit order.

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