How many adults have access to formal credit in Colombia? This is what a DataCrédito study says

Credit is not limited to the financial sector. In the current scenario, these operations have a broader and more complex scope. The disbursement of money by a bank is one of the best-known ways of accessing this type of loan, although - and fortunately - it is not the only one.

The market is increasingly provided with alternatives for people to purchase goods and services. Financing of beauty products by direct sales companies, the BNPL ('Buy Now, Pay Later') modality or even postpaid plans in the communications sector reflect the diversification of the offer.

With the aim of offering a comprehensive and multi-sectoral view of access to credit in the country, DataCrédito Experian presented the study 'Rethinking credit inclusion in Colombia'.

“Our goal with this new report is to make all the actors in the financial and credit system in Colombia visible. Rethinking the concept of credit inclusion means understanding that credit in the country is dynamic and that, over the years, we have seen that people have managed to access credit from various offers in the market,” explained Daniel Vargas Umaña, public affairs manager for Experian in the Spanish Latam region.

The report focuses on credit inclusion, broadly understood as “the percentage of adults with a formal credit obligation out of the total number of adults in Colombia, regardless of the type of credit or the sector where it was acquired,” and other aspects such as the level of experience, the portfolio of Colombians and the sectors in which they have obligations.

By the end of the third quarter of 2024, 75 percent of the adult population in Colombia had access to credit. This corresponds to 33.2 million out of 44 million, according to Dane, or three out of every four adults.

This percentage is four percentage points higher compared to the first quarter of 2023, when financial inclusion reached 71 percent. “Approximately one million adults accessed credit between 2023 and 2024,” says the DataCrédito Experian study.

The 75 percent figure is partly a result of credit being offered by companies of all kinds and not by any particular sector, as discussed further in the report.

Although financial inclusion increased compared to 2023, this did not translate into the level of experience or credit portfolio: 41 percent of Colombians who have had access to credit in the last four years have done so with only one obligation (Initial level), while 21 percent have done so with two (Basic level). This means that 62 percent have a lower level of experience.

The Expert experience level (those with more than five current payment obligations or more than $100 million of current quota) represented 15 percent for the third half of 2024.

“The vast majority of the population covered by credit has a low level of credit experience in terms of amount and value,” the credit risk centre explains. The deepening of credit is, therefore, one of the great challenges.

Now, how do adults get into debt? This was a question that DataCrédito also set out to answer. To do so, it segmented the adult population according to the portfolio of credit products in force over the last four years.

The report found that 35 percent accessed small-dollar loans, BNPL (buy now, pay later), retail, direct sales, mobile services and education in the third quarter of 2024. This is a low-complexity portfolio.

With 34 percent for the same period, the next category was Diversified, people with more than three portfolios who use loans to “finance their personal or commercial activities” and who are familiar with these operations.

In terms of the adult population's experience in the sectors, the combination of Financial and Real has the highest share with 28 percent. This is followed by Financial and any other sector other than Real and Fintech with 24 percent.

“The Real sector, possibly combined with another sector that does not include the Financial and Fintech sectors, has a share of 13 percent. Finally, the Communications sector (Telco) represents a relevant segment with 14 percent, generating credit experiences for a part of the population,” they conclude in the report.

This information gives us a path to continue analyzing how all actors in the credit system should understand access and the variety of credit products.

Santiago Rodríguez, PhD professor at the Universidad de los Andes, highlights the importance of continuing to work on financial inclusion across different sectors.

"There is already a first step towards getting closer to credit and the information necessary for people to create a credit reputation and explore deeper credit alternatives. This information gives us a path to continue analyzing how all actors in the credit system should understand access to and the variety of credit products," said the expert.

DIGITAL REACH EDITORIAL