The Ministry of Finance has dusted off its plan of creating a so-called positive credit register to display everyone's loan obligations, which it believes could bring down interest rates and avoid people going bust.
The register would offer creditors an overview of a potential customer's existing obligations with all financial institutions that join the system. This could help avoid people accumulating debt they cannot service.
"It would reflect all of the customer's financial obligations – housing loans, various credit cards, consumer loans – the goal being that all of these credit providers share their information in bulk to allow others to make more informed decisions and not provide the consumer with too much credit," said Tarmo Ulla, head of private banking at Swedbank.
The register would constitute a gigantic database that runs the risk of data leaks. Thomas Auväärt, head of the financial markets department of the finance ministry, said that malicious advertising should be seen as another potential risk.
"The ministry would like to avoid the register being used to offer people even more loans, with banks or other credit institutions singling out people who are prone to borrowing," he suggested.
That said, the ministry believe the register could result in lower interest rates and streamline the issuing of loans.
The Ministry of Finance hopes to have the legal basis necessary for the register by next year. The platform itself could be finished by 2024.
A total of 100 different creditors that issue loans to private individuals currently operate in Estonia. When making loan decisions, a bank or other creditor may not be aware of all of a borrower's existing financial obligations. Bank statements may reflect payments made on existing loans, but people often have several bank accounts, which they may not disclose to lenders.
Editor: Marcus Turovski