Difficult year in Finland: 382 000 persons with payment defaults is the new record
In 2018, approximately 1,6 million new payment default entries were registered to consumers. The total number decreased by 5 per cent, but a more closer examination demonstrates that the indebtedness problems of Finnish people have not mitigated. In Asiakastieto Group’s consumer credit information register there is now the record number of 382 000 persons with payment defaults, i.e. 7 700 more than a year before. Each registered subject has on average 15 payment defaults.
”The number of persons with payment defaults is increasing, even though the economic development is positive and the employment is on the mend as well. What we need now are quick and concrete actions to stop the problem of indebtedness from expanding. In Sweden, for example, the trend has been completely opposite. They have less persons with payment defaults than before. The extensive use of positive data has helped there”, Asiakastieto Group’s Business Director Jouni Muhonen points out.
The examination of judgments on demand for payment given by district courts provides an idea of Finns’ debt problem. According to Jouni Muhonen, the fact that the number of judgments has increased by almost a fifth (18%) is very alarming. The situation awareness becomes clearer when the status of applicants for consumer credits is examined on the basis of the system for sharing positive data* maintained by Asiakastieto.
”Consumers applying for new credit have more debts than before. The consumers who applied for new credit from companies exchanging positive data in 2018 typically had other consumer credits in the amount of 6 500 euros. The sum has increased by a third in a year”, Jouni Muhonen tells.
In practice, this statistical information confirms the general observation that consumers delay the collapse of their card house of debts by paying off old credits with new ones.
”In this case, a new credit is like Russian roulette for all parties. It is of general interest that special attention is paid to credit policy and risk management”, Jouni Muhonen states.
Future lies in the youth – the elderly run into debt fast
Examined by age classes, there are two trends in the payment defaults: the situation is improving in the youngest adult age classes, but the trend is the opposite among the seniors. There are now 9 per cent fewer persons under 20 years old with payment defaults than a year ago, and among the 20 – 24 year olds, the number has also decreased slightly. There has been a fall in the number of young persons with payment defaults already for six years.
”Companies tightened their credit policy, when an increased risk was observed with young adults. This together with enhanced training and financial awareness has helped to reverse the trend. The same development should be accomplished with other age classes as well, Jouni Muhonen observes.
On the other hand, the number of persons with payment defaults is growing fast in the group of senior citizens. As many as nearly 34 500 over 65 year olds have a payment default entry, and the number has increased by nine per cent in a year.
*Familiarize yourself with the inquiry system for positive credit information maintained by Asiakastieto Group (in Finnish): https://www.asiakastieto.fi/web/fi/positiivinen-tieto.html