The cornerstone of unity

80 SOCIAL CREDIT
In the 1990s legislative means were used in Finland to help those who had accrued excessive debts during the 
economic depression. The Finnish Debt Settlement Act came into effect in 1993. However, it was later noted 
that voluntary debt settlement resources, such as economic counselling and social credit, were also needed to 
solve and prevent debt problems. 
In 1999
–2001 the Ministry of Social Affairs and Health implemented a Social Credit Pilot Project in eight 
municipalities. The results indicated that social credit can prevent economic marginalisation and excessive debts 
in households with low incomes and limited means, and also promote the independence of the family. 
In three years the Pilot Project granted more than 1,100 credit payments, amounting to over 3 million euros. 
The project researchers estimated that credit losses occurred in approximately 5% of cases, but part of this 
could be covered with interest payments. For example, in Helsinki the income from interest was 176,000 euros, 
while credit losses were 101,000 euros in total. 
The Social Credit Act came into effect on 1 January 2003. Amendments were made to the Social Welfare Act 
and the Act on the Status and Rights of Social Welfare Clients by including clauses relating to social credit. 
Municipalities (innovation no. 4) have the power to grant social credit as part of social welfare to inhabitants 
who have no other way of getting credit on reasonable terms, e.g. because they have defaulted on previous 
credit contracts, or have a low income or limited means. Credit can be issued for debt restructuring, household 
purchases and renovations, or as a student loan for those who do not qualify for a state guarantee for a student 
loan because they have defaulted on previous credit payments. 
However, social credit cannot be issued as a substitute for any social assistance that the client is entitled to. 
In Helsinki the social administration has issued social credit since 1999 
– first as part of the Pilot Project and 
since 2003 as permanent statutory activity. Credit is a means of restoring clients’ independence in the form of 
social assistance. According to calculations, social assistance savings are considerably higher than the 

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operating and credit loss costs of the social credit programme. Credit is issued by the social administration’s 
economic and debt counselling department, and it is included in the individual person’s voluntary debt settlement. 
The debtor is thus provided with flexible economic counselling, especially when there are problems with debt 
repayment. The maximum loan is 10,000 euros and the maximum repayment period is five years. The client 
pays interest according to the 12-month Euribor index. There are no other expenses. 
Repayment problems regarding consumer loans have increased in Finland. Social credit is an important 
means of helping to solve the debt problems of households with low incomes or limited means. Often they are 
the ones who have to pay the highest price for consumer loans. 
Marianne Rikama 
– Director, Helsinki social services department