receives

35% of Colombians who are in default who receive a credit opportunity recovers, says a study by the information and risk center company TransUnion.

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The analysis says that 70% of consumers in default who have access to personal credit keep that new loan up to date, lor that represents an opportunity for clients and entities to extend liquidity to a segment that needs to overcome its financial difficulties and pay overdue obligations.

Virginia Olivella, Director of Research and Consulting at TransUnion Colombia, spoke about the study.

What did the study consist of?
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TransUnion studied consumers who originated non-mortgage loans between July 2021 and June 2022 and analyzed the behavior in these new loans 12 months later.

The analysis was performed by comparing consumers who were in default on one or more of their existing credit products at the time of origination of the new credit with those who were current on all of their existing credits, by risk profile.

We wanted to understand if consumers who were in arrears and received additional liquidity with the opening of a new credit card, free investment or draft, recovered from their existing delinquencies, if they paid their arrears by obtaining additional liquidity and if they remained day in the new credit.

(See: Microcredit, the entry for new forms of financing).

What result stood out?
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During the study, some 240,000 consumers who opened credit products other than mortgages were in default in the month prior to that origination, and 85% had credit risk scores in the prime (superior) or below prime categories.

Credit cards and free investment cards were the most common open products among consumers in default. Customers with fewer delinquent accounts and lower delinquent balances showed better performance on their new loans.

(See: BBVA disbursed sustainable loans for $3.8 billion).

What are you looking for?
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We want to help entities identify that segment. Teach them that there are advanced tools and show them that there may be a beneficial segment for entities. We look at 12 and 24 month trends to see the consumer in a richer way and the good or bad behaviors that are the reason that led them to today’s situation. This is what we call trend attributes.

By combining the variables there is a prototype model and we invite entities to look at those segments where there are consumers who meet the two attributes: recovery and keeping up to date with obligations.

What comes out of the study?
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Modified and restructured. It is supporting consumers in what they have. and support entities to fine-tune those strategies and to show those who did not dare that there is benefit.

What are the credits where debtors fall most behind?
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We looked at the most common type of credit that consumers who receive this type of additional credit are in default on to see if there was a pattern and found that the most typical products in which they were in default were telecommunications, real sector (stores and businesses ) and then in third and fourth place credit cards and personal credit.

In that sense, there seems to be a certain bias on the part of entities to give credit to those who are in default in telecommunications compared to those who are in default in other products such as personal credit.

Another interesting fact is that entities give credit to those who are in default mainly through credit cards and personal credit.

(See: They provide guidelines for credit operations through ‘fintech’).

What about credit cards?
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Something interesting with the cards is that they increase, but in new credits the number fell and increases are seen in average balances. As it is more difficult to access a card, they use it more. But we must remember that it is still expensive to consume with the card.

But there are risks for entities.

Okay, but it is a risk today for everyone. Delinquency makes entities cautious, but the question is whether to stop growing or look for those segments or subsegments where they can grow prudently, with the tools to originate in the best way. Find consumers who are in the appetite for credit.

Are all entities willing to give credit to defaulters?
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It is something that can be looked at by type of entities. There is no clear answer. There are some that have a different risk appetite, we have not yet done the analysis for that particular issue.

(See: Until June, less credit cards and debt).

Holman Rodríguez Martínez
Journalist Portfolio