- As from 1 April 2024, Finnish credit institutions can use the national positive credit register’s information to assess the creditworthiness of loan applicants.
- The positive credit register will facilitate lending and help prevent households from taking on too much debt.
- In Finance Finland’s view, credit institutions should be allowed to access the information of the register independently, also without the customer’s initiative.
- If banks were able to access the register on their own initiative, they could better prevent repayment problems.
- The April launch also includes an e-service through which private individuals can view data on their own loans and set a voluntary credit ban for themselves.
The positive credit register is a database of information on Finns’ loans from different credit institutions. Lenders report all retail loans to the register and use the data to assess loan applicants’ creditworthiness and overall financial position. The register will be launched on 1 April 2024.
At the start of February, credit institutions began entering data on Finns’ home loans, car loans, consumer credits, credit cards, student loans and hire-purchase financing to the register. From 1 April, lenders can use this data in their assessment of loan applicants’ creditworthiness. The register will also show delays of more than 60 days in the payment of loan instalments.
“The positive credit register provides a solid starting point for assessing a customer’s creditworthiness. It will also help curb excessive household debt, as the register shows if there are delays in the instalments of existing loans. This gives the lender a better opportunity to help prevent the pile-up of financial difficulties”, says Finance Finland’s Head of Credit and Insolvency Regulation Antti Laitila.
The current rules of the register allow banks and other financial institutions to only access a customer’s data in the register when the customer applies for a new loan or wants to amend an existing loan. This means that a customer’s repayment problems, for example, are not sufficient grounds for the bank to view their credit information in the register.
“It’s not unusual for debtors to avoid or put off contacting the lender when they run into payment difficulties. Over-indebtedness would be easier to prevent if banks could access the register on their own initiative when a customer is in arrears on payments. This way they could, for example, suggest loan restructuring or other measures before the customer is seriously struggling.”
The register is also useful for consumers, who can view data on their own loans and set a voluntary ban on credits through an e-service for private individuals. This facilitates the effective management of personal finances.
Housing company loans to be included in the future
A Ministry of Justice working group is already preparing an extension to the positive credit register. The objective is to enable the transfer of data from the Residential and Commercial Property Information System to the positive credit register. The scope of the transfer covers information on shareholders’ share of housing company loans, which is key information when assessing the creditworthiness of a private individual.
“Housing company loans comprise a significant part of Finnish households’ debt, but they aren’t included in the information of private customers. Extending the scope of the register in this direction is justified”, Laitila comments.
Laitila highlights that the flow of information between the Residential and Commercial Property Information System and the positive credit register must be automatic. It must not require additional manual work from banks or authorities.
“The positive credit register automatically receives income data from the Incomes Register. There is no need to submit it separately. The same principle must be applied with the Residential and Commercial Property Information System”, Laitila says.
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