Positive Credit Register problematic for sole traders

The Positive Credit Register has a problem which could make purchases harder for single-person business owners.

The Positive Credit Register has been operating since the start of April, but has already caused bewilderment among single-person business owners.

When a private person applies for a loan, the lender is obliged to check the applicant’s creditworthiness. For this purpose, the lender applies to the Positive Credit Register for a credit data file, which provides current information about the applicant’s credits filed with the register, as well as the applicant’s income.

Sole traders are in a difficult position, as their data are not found on the register. Thus, lenders may refuse them loans.

A single-person business owner may appear insolvent on the basis of the register, as they have no income data. As a result, finance such as hire-purchasing may be refused.

“One of the biggest problems with the Positive Credit Register is that not all company income appears in it. These include incomes earned as a sole trader. The Register does not contain data on business income or capital incomes, as these data are not shown in the Incomes Register, which the Positive Data Register is based on,” says Petri Malinen, an economist at Suomen Yrittäjät, the Finnish SME association.

Even though the customer may provide supplementary information to the lender, Malinen says that problems can arise in situations where consumers borrow for products such as a new phone or domestic appliance. In these situations, automated credit decisions are based on register data, and the customer is not able to supplement information.

“There is no easy or fast solution, but it is good to know that even though a lender is obliged to check the Positive Credit Register data, they can still use their own risk-based discretion for each customer. A sole trader should prepare for credit applications diligently.”

Positive Credit Register

The Positive Credit Register gathers information on credit issued to individuals, and on their income. The Register aims to

• prevent households from taking on too much debt
• improve lenders’ ability to test loan applicants’ creditworthiness
• help individuals to manage their finances better
• provide a source of reliable information on the credit market
• provide an easier method of follow-up and control of the credit market.

The Positive Credit Register was launched on 1 April 2024. The Register’s online service for private individuals were launched on the same date. The Act on the register entered into force on 1 August 2022.

The Register is being rolled out in two stages: In the first stage, information on consumer credit and other comparable lending will be included in the register. Lenders have been able to report information since 1 February 2024. In the second stage (from 1 December 2025), lenders start reporting loans granted to consumers other than private individuals. Information included in the second stage can be retrieved from the register from 1 April 2026.

The public authorities listed by the Act can use data from the Positive Credit Register to carry out their legal duties. The Financial Supervision Authority, the Finnish Competition and Consumer Authority, the Financial Stability Authority, the Bank of Finland and Statistics Finland have access to the Positive Credit Register Data.

Source: Tax Administration

Tax Administration admits problem

Marjaana Ohralahti, the functional officer at the Positive Credit Register, which is part of the Tax Administration, admits that the problem has been acknowledged.

“The Positive Credit Register data come from the Incomes Register. That Register does not contain information on capital incomes or business incomes, just salaries and benefits for the past 12 months.”

Ohralahti says that there has been feedback about the problem, but that for now, at least, nothing can be done about the matter.

“Of course, it is regrettable if this affects a person’s access to loans. We’ve advised our clients to contact lenders directly if they have income that is not reported to the Incomes Register.”

SY raised concerns about Bill

In 2022, Suomen Yrittäjät pointed out possible problems the Positive Credit Register could cause sole traders. In a statement to Parliament’s Legal Affairs Committee dated March of that year, Suomen Yrittäjät highlighted the part of the Bill which stated that establishing the Positive Credit Register could have an impact on sole traders whose creditworthiness would be reviewed as natural persons.

The Bill stated that this impact could in some cases lead to more stringent conditions for issuing loans than before. According to the Bill, this could lead to more difficult business launches or continuations of operations.

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