The new Positive Credit Register (PCR) has changed lending in Finland - but does it go far enough?

The way Finnish credit providers assess loan applications has changed with the Positive Credit Register (PCR) coming into effect on April 1, 2024. This system gives financial institutions greater insight into the debt and spending of credit applicants, aiming to reduce over-indebtedness among Finns. 

Lenders can now see consolidated consumer credit information, including mortgages, consumer loans, credit cards, and other payments or debts. Loan applicants also have access, allowing them to see what credit and income information about them is in the register.

Credit providers and financial institutions are only allowed to use the PCR credit when granting credit or assessing creditworthiness. This includes when a consumer applies for a new loan or wants to make a change to a current loan that could require a creditworthiness assessment. This could be, for example, increasing the loan amount or period, or applying for a longer repayment holiday. The reasons for introducing the PCR were clear: High levels of consumer indebtedness pose significant risks across the board. For individuals, it can lead to financial stress and limited economic mobility. On a societal level, widespread indebtedness may strain social welfare systems. Financial institutions face increased default risks, impacting overall economic stability. In terms of a nationwide initiative, Finland is making critical steps to ensure that its financial institutions increase consumer protection. But does the PCR go far enough?

Even before the PCR was implemented in Finland, many of the leading banks in the Nordics had already been using Monthio to make better credit decisions and ensure regulatory compliance. In fact, with a solution like Monthio, banks in Finland (and across Europe) are able to get an even more accurate overview of the financial health of loan applicants.

This data, gathered from Open Banking and other data sources, is collected, processed, cross-validated, and presented clearly, giving a seamless experience to both applicants and credit officers. By using PCR together with all other relevant data sources, such as Open Banking and additional sources, financial institutions such as Danske Bank, Nordea, and BMW are utilizing Monthio to support them in their mission to facilitate more responsible lending and a better customer experience, but also to help them cut fraudulent activities and defaults.

Find out more about how Monthio is helping banks here:

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