Currently, the Finnish authorities only monitor people’s debts insofar as they send out bad credit record notifications to those who have seriously failed to pay up. This can have far-reaching consequences for future financial transactions like seeking more credit or renting an apartment, or even get a phone contract. The dark mark stays on a person’s record for 2-3 years.

In the first half of this year, over a million new notifications of bad credit history were sent out.

Many Finns are rapidly sinking deeper into debt — and the cycle repeats itself when they pay off their loans with other loans. Easy credit with astronomical interest rates does not help matters.

“It’s difficult to start untangling the situation at the point when a person has some sixty quick loans and a thousand euros’ income. At some point, this game should have been up,” says Executive Director Juha A. Pantzar from the Guarantee Foundation, which provides debt counselling.

With an eye on the future

The Guarantee Foundation has received more calls so far this year than during the whole of 2011.

One proposed solution is setting up a positive credit file, which would include not only bad credit history but also data about loans successfully paid off. Credit risks could fall if a person’s entire debt record is available in one register.

Pantzar says that the experience in other EU countries clearly indicates that the register helps to prevent over-indebtedness.

Not clear-cut

But the Data Protection Ombudsman and the Consumer Agency say that this scenario creates other risks.

“We suspect that a positive credit register would also include people who don’t have any problems. That would, naturally, raise questions of data protection. And in addition, maintaining the register will cost money and all of us will have to bear the costs,” said the agency’s Director General, Päivi Hentunen.

It’s also unclear whether, with 80 quick credit companies ready to supply loans, any registry could provide an accurate picture of a person’s debts.

The government programme includes plans to consider setting up a credit register in Finland. The Justice Ministry is to launch a study into the issue this autumn.