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Loans and store cards are the main reasons why Brazilians have a bad credit rating
Marcela Kawauti – Chief Economist at SPC Brazil

A national survey conducted only with defaulting consumers by the Credit Protection Service (SPC Brasil) and the National Confederation of Store Managers (CNDL) reveals that bank debts continue to be the main cause of “bad credit”. According to the survey, seven out of ten (76.1%) respondents who took out a loan are in default because they did not pay the installments on time. Purchases made with store cards appear next, leaving 73.1% of its users with their names on the debtors' registry. The percentages remained stable compared to last year (74.5% for loans and 74.6% for store cards), but showed an increase compared to 2014, a period in which the economic crisis had not yet reached its peak.

Late payments on credit or installment plans (62.5%), outstanding nepal number dataset on credit cards (62.1%) and overdrafts (46.9%) came next as the types of credit that most often led respondents to default. These last two types showed a significant drop compared to 2015, when the percentages were 73.6% for credit cards and 67.8% for overdrafts.

“In the current uncertain economic climate, it is important for consumers to be conservative with their budgets and take some precautions when taking on new debt. This is especially true if the debt is on a credit card or overdraft, as the interest rates charged on these types of loans are the highest on the market. In some cases, they can exceed 450% per year,” warns Marcela Kawauti, chief economist at SPC Brasil.

Telephone bills and school fees

The study also reveals that bank debts are not the only reason consumers are on the list of defaulters. Many are facing credit restrictions because they have failed to pay bills on time for some type of service not necessarily linked to banks. In this case, the main bill responsible for leaving consumers with a bad credit rating is landline and cell phone bills, cited by 14.7% of respondents who have this type of commitment (in 2015, the percentage of late payments was 21.7%). In second place are outstanding school fees, cited by 9.1% of respondents (in 2015, it was 16.0%). Late payments to pay-TV operators (7.1%), health insurance (6.8%), water and electricity bills (6.1%), rent (2.2%) and condominium fees (2.2%) complete the ranking of “villains of default” when it comes to non-bank debts.

Fear of taking on new expenses

Although default rates are high for some types of debt, Brazilian consumers are avoiding taking on new financial commitments. The SPC Brasil survey showed a drop in the percentage of defaulters who admitted to having taken on debts compared to 2015, whether they were up to date or late, in practically all the commitments surveyed.