At the End of Last Year, 36,000 Self-Employed Credit Delinquents... COVID-19 Expected to Worsen Situation

Amid the deepening struggles of self-employed workers due to the impact of COVID-19, Seoul Hwanghak-dong Kitchen Street showed a quiet scene on the 30th of last month. / Photo by Moon Honam munonam@

[Asia Economy Reporter Kim Hyo-jin] The number of self-employed individuals unable to conduct normal financial transactions due to credit delinquency approached 36,000 as of the end of last year.

According to data on personal business loans (self-employment loans) submitted by NICE Credit Rating to Kim Jong-seok, a member of the National Assembly's Political Affairs Committee from the Future Korea Party, the number of self-employed financial delinquents was recorded at 35,806 as of the end of last year.

Financial delinquents refer to individuals who have failed to repay loans exceeding 500,000 KRW or two loans of 500,000 KRW or less for more than 90 days at financial institutions. Since the legal abolition of the credit delinquent system in 2005, the term has been changed to financial delinquent.

The credit ratings of self-employed financial delinquents are as follows: 451 in grade 7, 1,679 in grade 8, 6,666 in grade 9, and 25,213 in grade 10. Among the 35,806, 34,009 have a credit rating of grade 7 or lower. Low-credit individuals with grade 7 or below cannot obtain loans from institutional financial companies such as banks. Two out of three self-employed financial delinquents have an annual income below 30 million KRW.

As of the end of last year, 2,095,166 people used self-employment loans. This means that one in every 50 people fell into a financial delinquency status. The number of self-employed financial delinquents increased from 33,292 in the second quarter to 35,567 in the third quarter, and 35,806 in the fourth quarter of last year.

This contrasts with household loan financial delinquents, which decreased from 793,963 in the second quarter to 775,692 in the third quarter, and 750,714 in the fourth quarter. As of the end of last year, 5,961 self-employed individuals were registered as financial delinquents at loan companies, a 28.7% increase from 4,630 in the second quarter. This indicates that more people have been cut off from funding sources.

This trend is expected to have deepened further in the first quarter of this year due to the impact of the novel coronavirus infection (COVID-19).

This content was produced with the assistance of AI translation services.