How digital banks are offering credit to the unemployed

In recent years, digital banks have revolutionized the way we handle our money. In addition to bringing more agility and practicality, they are breaking down barriers that, for a long time, excluded a large number of people from the traditional financial system. One of the greatest examples of this transformation is the offer of credit for people with a negative credit rating, something that has always been a major challenge for those with restrictions on their name. But how are these institutions managing to do this? We'll find out more in this article.

What does it mean to be negative?

To be denied credit is to have your name registered with credit protection agencies such as SPC or Serasa. This happens when a person fails to pay a debt and, after the creditor tries to negotiate, their name is included in these registers. Having a negative name can cause a number of difficulties, especially when it comes to obtaining credit on the traditional market.

However, digital banks are changing this reality. These institutions have found ways to offer credit even to those who face this situation. And often with less bureaucracy than traditional banks.

How are digital banks facilitating access to credit?

Digital banks came with the promise of making Brazilians' financial lives easier. As a result, they have started to develop more modern and effective methods for assessing their clients' financial profile. Below, we explain some of these practices that are allowing those with credit losses to have a new chance at credit.

Personalized assessment of the client's profile

One of the main innovations of digital banks is the way they evaluate their customers. While traditional banks focus almost exclusively on credit history, fintechs use other data to understand a person's real financial situation. This includes analyzing spending behavior, bank account movements, bill payments and even consumption habits.

This means that, even with a negative credit rating, if the client has shown healthy financial behavior in recent months, they can be considered suitable for credit. This evaluation method is much more inclusive and fairer, allowing more people to have access to financial products such as loans and credit cards.

Less bureaucracy and more agility

Another important point that facilitates access to credit for those with a negative credit score is the lack of bureaucracy in digital banks. Many of these institutions allow customers to do everything through the app, without having to go to a branch or deal with long queues and complex processes. Credit approval, for example, can be done completely online and, in many cases, the money is released into the account in a matter of minutes.

The absence of abusive fees and transparency regarding payment conditions are also factors that attract those with a bad name. Unlike traditional banks, fintechs generally have a fairer and more accessible interest policy, taking into account the client's financial situation at the time.

Strategies used by digital banks to offer credit to creditworthy people

Each digital bank has its own strategies for making it easier to grant credit to creditworthy people. Below are some common practices that have worked well:

1. loans with guarantees

Some digital banks offer loans for people with a negative credit score that require collateral. This can include the use of assets such as property or a vehicle as a way of securing payment of the debt. By doing this, the bank reduces the risk of default and is able to offer better conditions for the customer, even if their name is negative.

In addition, there are loan types that use the FGTS (Severance Indemnity Fund) as collateral. In this case, part of the customer's FGTS balance is blocked to ensure that the loan installments are paid. If the customer is unable to pay, the FGTS amount is used to pay off the debt.

2. Payroll loans

Another type of credit offered by digital banks for people with credit losses is payroll loans. This type of loan is deducted directly from the customer's payroll, which significantly reduces the risk of default for the bank. As a result, interest rates are lower and conditions are more favorable.

Digital banks, as well as traditional banks, usually offer this type of service to pensioners and civil servants. In addition, more and more private companies are partnering with digital banks to offer payroll loans to their employees.

3. Credit cards with reduced limit and gradual increase

Another financial product that digital banks often offer to people with a negative credit rating is a credit card with a reduced limit. Initially, the customer receives a lower limit, but as they use the card and pay the bill on time, the bank gradually increases this amount. This strategy allows the customer to rebuild their credit history, earning the trust of the financial institution.

In addition, many of these cards do not charge annual fees and have cashback programs, which encourages the conscious use of credit.

4. Analysis of other financial behaviors

As mentioned earlier, digital banks use a broader analysis of their customers' financial behavior. This includes the timely payment of basic bills, such as water, electricity and telephone, and even the movement of the current account. If the customer has a good track record in these areas, they can get credit even if they have a negative credit rating.

This approach is much more flexible and takes into account the customer's financial reality, rather than relying solely on default records.

The impact of this financial inclusion

Digital banks' offer of credit for the unemployed not only brings individual benefits, but also has a positive impact on the economy as a whole. By including more people in the financial system, there is a reduction in indebtedness and a greater circulation of money. This helps boost consumption and economic growth.

In addition, access to credit can be a crucial point in helping people reorganize their finances and get out of default. With credit in hand, many people are able to pay off outstanding debts, which improves their credit score and opens more doors to new financial products.

See also: How to spend less on credit cards? See the tips

September 18th, 2024