Access to credit hinders youth projects in the Dominican Republic

Being young and lacking financial experience is one of the main difficulties in accessing credit in banking establishments, since age represents a high-risk profile. However, the results of a study carried out in several countries show that many of the consumers who enter the credit market for the first time have a medium risk profile, good behavior in their commitments and sufficient knowledge of the financial sector.

To apply for a financial product in the Dominican Republic, it is first necessary to provide a fixed source of income that guarantees solvent banks the use of their products, which are subject to a fixed commission rate for their use and maintenance.

Consumers of financial products who already have experience have the facility to provide the economic guarantee that banks need to apply for a loan, but for young people who have just entered the sector and do not have the necessary financial history to apply for a loan, it is a difficulty that delays your long-term projects.

For Virginia Olivella, director of research and advice for TransUnion Latin America, financial institutions have a unique opportunity to grow with these young consumers, grow with them and guide them from the beginning of their credit cycle.

Olivella, who is also an economist, told Diario Libre that people without credit products, including young people with low credit activity, "from the Dominican Republic and around the world" seem to know a lot about credit and understand the risks of going into debt.

The TransUnion representative noted that "more of these consumers want to know more about the benefits of credit and expect affordable interest rates and monthly payments. They also want more clarity on the full cost of credit."

Her response is based on a study by the international company titled "Expanding Access to Credit: A Deeper Perspective on Consumers Without Credit Products and With Low Credit Activity."

He stressed that in addition to the difficulties of new bank customers, the long approval processes or other negative experiences when applying for a loan, there are situations that can cause a consumer to reject a loan offer made by the company on other occasions. .

The expert reported that a constant concern among unbanked citizens is losing control of their finances, leading 34% of low credit consumers not to consider borrowing.

In this regard, he stated that the survey showed that the majority of low-credit consumers (55%) in the Dominican Republic had purchased alternative sources of financing outside of traditional credit products to meet their financial needs in the last year, namely loans relatives. and friends are the most common source, especially for young people.