Between July and September, the number of consumers with payment defaults increased by 3,800, a smaller rise than the 6,000 seen during the previous quarter. Despite the deceleration, these figures suggest a persistent challenge with consumer debt in Finland.
Regional and Demographic Trends
The highest concentration of individuals with payment defaults can be found in Päijät-Häme, while the lowest is in Åland. A deeper look into the data reveals that the number of first-time payment defaulters has remained steady, with around 19,000 consumers receiving their first default notice between July and September, a slight decrease from the previous quarter’s 19,200.
A significant factor behind many of these defaults is unpaid consumer loans. In fact, 63% of court-ordered debt judgments in 2024 have been due to outstanding credit, such as account credit and one-time consumer loans. This pattern has emerged despite efforts to tighten financial regulations.
Debt Cycle Challenges
Mikko Karemo, Deputy CEO of Suomen Asiakastieto, expressed concern over the limited impact of changes to the Credit Information Act, which came into effect in late 2022. "When the amendments were introduced, 18,600 individuals had their payment defaults removed from the register because they had already repaid their debts. However, it’s clear now that this legislative change has not led to a long-term reduction in over-indebtedness. Today, the number of consumers with payment defaults is almost back to where it was at the end of 2022."
Another troubling trend is the growing number of younger adults facing financial difficulties. Compared to the same period last year, first-time payment defaults among 20-year-olds have surged, with a particularly sharp rise among consumers under 20 years old, where the number of new defaults has jumped by over 41%.
Meanwhile, older age groups are not immune. For example, the number of first-time defaults among those aged 50–54 has risen nearly 39% since last year. Conversely, the increase among consumers over 70 was relatively modest, at just 22.5%.
Loan Mismanagement Behind Many Defaults
Karemo also noted the role of insufficient background checks in the rise of payment defaults. “Many of the issues we’re seeing stem from credit that should never have been approved based on the customer’s overall financial situation. Inadequate loan assessments are detrimental to both consumers and businesses alike,” he said.
Looking ahead, Karemo stressed the need for lenders to improve their evaluation processes to prevent further over-indebtedness. He also highlighted the deeper issues with Finland’s credit system, where consumers often find themselves oscillating between financial recovery and renewed debt. “The cycle of debt is incredibly hard to break. While resolving a payment default helps temporarily, it doesn't address the underlying financial habits, allowing the debt cycle to continue,” he explained.
On average, a Finnish consumer with a payment default has 14 such records, underscoring the severity of the problem. Karemo concluded that while the current legal framework may incentivize debt repayment, it does little to foster long-term financial responsibility or prevent deepening debt cycles.
HT
