These are the ten provinces with the highest level of creditworthiness in Ecuador, so their residents are better candidates for bank loan approval

Financing travel or studies, covering medical treatments, buying a house or a car are some of the reasons why citizens seek access to bank loans in Ecuador.

And along the way, it is very valuable to know whether that person is suitable for obtaining a loan, which is measured achieve credit, which is one of the elements that financial institutions analyze.

He achieve It is a rating whose value ranges from 1 to 999, and the process is carried out by credit bureaus. This result determines the probability that a person will not repay the loan, explains Marco Rodríguez, executive president of the Association of Private Banks of Ecuador (Assobanca).

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The higher the score achievethe probability of non-payment is lower, and so on, i.e. when it approaches 1, this possibility is higher. “This means that when debts are paid on time, achieve it will be higher, close to 999 points. While, if they are not paid on time, achieve It will get worse,” says Rodríguez.

Jacqueline Peñaherrera is a mother of two children. Only her husband works at home, but since he already has other debts, she decided to look for a loan. He consulted his achieve and it turned out to be 830, so he went to the banks, but they refused him a loan.

“They asked me for a representative, for example, my husband, and he did not want to; So it couldn’t be done. Maybe a loan will help a lot. In addition, they asked for other requests,” says a woman who lives in Guayaquil.

Jacqueline’s score, according to Aval Buró and the Bank Administration, This is in the range of customers whose credit history has little or no overdue payments in the last 36 months. This range is 689-999.

While the range is from 377 to 689 for those who have late payments during the last 36 months. And from 1 to 377 is when there are repeated delays for that same period. “He achieve The credit report shows the customer’s payment behavior, but not the default values ​​of the system,” the subjects say.

Economic analyst Héctor Delgado indicates that each financial institution has its own credit policies and that they are not based only on achieve. “They also analyze the ability to pay, the level of debt, the number of active operations, guarantees and maximum amounts requested. For example, there are institutions that within their policies must adhere to a achieve minimum 600-700 points; Likewise, segmentations and differentiated products are done depending on achieve client,” says Delgado.

What is done in practice is that, depending on achievepre-approval campaigns are conducted, Delgado says, by approving amounts that the client has already managed and that can show up in bill movements or statements. “Banks evaluate what is called the ‘4 Cs of credit’: ability to pay, business conditions, collateral (guarantees) and the character of the client,” the analyst claims.

According to Asobanica, Imbabura is the province with the highest average achieve. The rating is 905 and speaks of the company’s payment behavior, emphasizes Asobanca. The figures correspond to the period from January to September 2023.

For Delgado, this means that the risk of credit approval in that province is very low, which reflects a very good payment culture and the absence of over-indebtedness.

The criterion is shared by Diego Cueva, director of the master’s degree in finance at UTPL (special technical university in Loja), who mentions that the accuracy is obvious. “They have good debt management and probably have access to better credit terms. There is a better analysis of institutions when approving loans, which makes it possible to maintain a high level achieve“, points out Cueva.

Other provinces with an average of achieve they are tall Cotopaxi with 896, Pichincha with 882, Tungurahua with 848, Los Ríos with 840, Cañar with 839, Santa Elena with 836Santo Domingo de los Tsáchilas with 830, Azuay with 827, and in tenth place is El Oro with 824 points.

And the list goes on with Mapajas with 823, Orellana with 820, Bolívar with 819, Guayas with 816, Sucumbíos with 811, Esmeraldas with 808 and Chimborazo with 803. And now in the 700 range are Napo with 799, Morona Santiago with 796, Loja with 793, Carchi with 789 and Zamora Chinchipe with 774.

In the second level is the province Pastaza, with 658 points achieve. This means that you are in the group of clients whose credit history has some unpaid obligations in the last 36 months.

According to Cueva, this is a moderate level, which does not necessarily mean late payment, but could indicate that there is a certain level of credit risk in that province. “This can happen due to the existence of late payments or higher utilization of the available credit which can change the levels achieve“, explain.

Delgado says that the probability of non-paying citizens in that province is higher than in the others, but that they cannot be classified as “bad payers” either.

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“We have to take into account that larger provinces have greater possibilities of risk atomization (not concentration),” says Delgado.

In short, for Rodríguez, these results show that achieve the credit status of Ecuadorians has improved and there has been a recovery in participation by punctually meeting their obligations.

“In September 2023, clients with the best credit rating, that is, those who have a score between 689 and 999 points, reached 71.38%, while in September 2022, this percentage reached 65.36%,” says Rodríguez.

What other requirements are taken into account?

Rodríguez indicates that it is achieve This is not the only condition that should be taken into account when approving a loan; There are other factors related to technical credit risk management, such as each person’s environment, i.e. income, other credit obligationsthe nature of the payment, the guarantee, the term of the loan and the destination of the loan.

“However, access to credit, during the first nine months of the year, is not limited exclusively to clients who have a high credit score; even customers with low scores or those who do not have a achieve They also gained access to credit, showing that private banking promotes financing for those clients with more challenging financial situations, and in turn promotes financial inclusion and better access to banking,” says the CEO.

The latest Credit X-ray report (Asobanca and Aval Buró from November 2023) reveals that new clients first accessed credit in the banking system between January and September 2023. “These people access financing without even having a credit history and build it from that point forward,” he says.

Between January and December 2023 the loan portfolio closed at 42.129 million dollarsthat is, a growth of 9.2 percent compared to December 2022, according to Asobanca.

Deterioration of results

Delgado explains that a achieve Credit can deteriorate due to several factors, such as a poor credit history, using the full credit card quota, late payments in the financial and commercial sectors, conducting refinancing and/or debt restructuring.

“Furthermore, if the person has not previously incurred debt, he achieve penalizes him with a not so high score, because he does not have a ‘credit record’; Therefore, it is always suggested to contract the debt for the construction of the property achieve“, says Delgado.

While Cueva points out that a achieve ranging from 1 to 377 is extremely low and generally reflects a very problematic credit history, caused by several aspects, including long-term non-compliance with obligations, high non-performing loans, bankruptcies and others named by Delgado.

Cueva adds that the deterioration is not so immediate. “It doesn’t happen after one late payment, but as a result of a consistent pattern of poor credit management over time,” he explains.

Cueva finally indicates that it is for calculation achieve Credit information from the last three years is used and updated monthly, “which includes loans from public or private financial institutions, cooperatives or mutuals, credit card debt, loans from commercial houses or car dealerships.”

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