“I will erase all delinquent records”… 3.29 million people can get credit, 150,000 people can get card issuance

2024-03-12 12:47:26

340,000 people now have access to bank loans

Small business owners with overdue payments of 20 million won or less

If you repay by May, your record will be deleted.

An advertisement related to debt repayment is posted at Gyodae Station in Seocho-gu, Seoul. 2024.3.4 [사진 = 연합뉴스]

Credit amnesty was implemented on the 12th for 3.29 million people who were unable to repay their loans on time due to rising interest rates, increasing their credit scores and erasing their delinquency history, allowing 260,000 small business owners and ordinary people and 79,000 self-employed people to use bank loans. Additionally, the credit scores of regarding 150,000 small business owners and ordinary people have increased to the point where they can receive credit cards.

The Financial Services Commission implemented credit recovery measures to support ordinary people who were struggling due to the burden caused by the COVID-19 pandemic and interest rate hikes. It is expected that up to 2.98 million individuals (small business owners and ordinary people) and up to 310,000 individual business owners will benefit. From this day on, people who have delinquent loans can check whether their credit has been pardoned through eight credit rating companies, including NICE Rating Information and Korea Credit Bureau (KCB).

This measure applies to borrowers who have delinquent payments of 20 million won or less from September 2021 to January this year and repay all of the overdue amount by May 31. First of all, as of the end of last month, 2.64 million individuals and 175,000 self-employed people paid off all their debts and met the amnesty requirements. As credit forgiveness can be received if the delinquent amount is repaid by the end of May, the number of beneficiaries is expected to increase to the level estimated in the financial crisis (2.98 million individuals, 310,000 self-employed individuals).

When you receive a credit pardon, your credit score automatically increases because delinquency history information is not reflected in your credit rating. As a result, it becomes possible to make new loans, change loan conditions to lower interest rates, and issue new credit cards.

According to NICE rating information, the average credit score of people who met the credit pardon requirements increased by 37 points from the existing 659 points. Those in their 20s and younger rose by an average of 47 points, and those in their 30s rose by an average of 39 points, showing a higher increase than the overall average. Those whose credit rating has increased will be eligible to change loans at lower interest rates in the future. Approximately 260,000 people have a credit score of over 863, the average credit score for new loans from the bank, making it easier to access loans in the future. Additionally, 150,000 people will be able to receive a credit card by meeting a credit score of 645 points (the minimum standard for credit card issuance). People who have been unable to receive microfinance products for vulnerable groups or small business start-up loans due to past delinquent repayment information will now be able to borrow money.

Also, according to Korea Evaluation Data, among the 175,000 people who already met the credit amnesty requirements, the number of people who were able to obtain bank loans was 3,000 (1.75), but following the amnesty, the number increased by 79,000 to 82,000 (46.8%). Credit scores increased by an average of 102 points from the previous 623 points. In addition, 172,000 people (98.2%) were able to benefit from an interest rate cut as their credit rating rose by at least one grade.

The information registration period for borrowers who used debt restructuring was also shortened from this day. Previously, debt adjustment information registration was canceled if repayments were made faithfully for two years according to the debt adjustment plan, but from this day, debt adjustment information registration will be canceled even if repayments were made for one year. In the meantime, if you used debt restructuring from the Credit Recovery Committee or the New Start Fund, the relevant information was registered with the Credit Information Service and you were disadvantaged in various financial transactions.

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