Credit expansion keeps pace with formal employment

With unemployment at the lowest level in the historical series, Brazil is making progress in financial inclusion and has the challenge of reducing the number of people in debt

The unemployment rate in Brazil reached 5.8% in the quarter between April and June 2025, according to the latest IBGE survey. The combination of the lowest unemployment rate ever recorded in the historical series and the advance of formalization, with informality reaching its lowest level of 37.8%, has created favourable conditions for granting credit. On the other hand, default rates remain high, which signals the need to pay attention to the population's financial behavior.

For Elias Sfeir, president of the National Association of Credit Bureaus (ANBC), the recovery in employment is boosting the supply of resources, a movement that has already been observed since the post-pandemic period. “The most recent results only confirm that the job market remains hot. This favors the supply of credit, but this process has been going on for some time. The expectation is that lending will continue to grow throughout 2025, but at a slower pace than that seen in previous years,” says Sfeir.

The growth in formal employment increases the ability to prove income, one of the essential elements for a more accurate and secure analysis. Even so, this increase in the supply of credit keeps delinquency at a high level, due to factors such as persistent inflation, high interest rates and the growing indebtedness of families.

It's important to note that even with the improvement in employment and income, defaults remain at high levels. In June, 77.8 million Brazilians were in default, with an average individual debt of R$ 6,128.26, according to data from the credit bureau sector. This apparent contradiction can be explained by economic and behavioral factors that go beyond the simple employment-unemployment relationship.

“Default has a cyclical component and depends on variables such as income, employment, inflation and indebtedness, as well as behavioral factors. It should be noted that the increase in the basic interest rate, currently at 15% per year, has made credit more expensive for consumers and companies, directly impacting consumers” ability to pay, even those who are in the job market," explains the executive.

Another factor that helps explain the increase in indebtedness, according to Elias Sfeir, is the entry of new consumers into the financial system, since many Brazilians have had access to credit for the first time and have yet to develop the experience to use it responsibly. “The scenario makes it clear that financial inclusion can only be achieved when access to credit is accompanied by education in its conscious use. The expansion of credit, driven by the fall in unemployment and other factors, without adequate preparation of consumers, tends to result in greater indebtedness, a risk that intensifies in the current context of high interest rates,” concludes the president of ANBC.